Markaz: GCC Aggregate Bonds and Sukuk market increase by 10% in H1 2018 led by Qatar Issuances


Kuwait Financial Centre “Markaz”, in its recent research report titled GCC Bonds & Sukuk Market Survey, has highlighted the trends pertaining to bonds and sukuk issuances in the GCC region during the first half of 2018. The report stated that the aggregate primary issuance of bonds and sukuk by GCC entities, including Central Banks Local Issuances, GCC Sovereign and Corporate Issuances, totaled USD95.25 billion in H1 2018, a 9.64% increase from the total amount raised in H1 2017. Qatar led the GCC issuances in terms of total value raised.

Central Bank Local Issuances are Fixed Income securities issued by GCC central banks in local currencies and with short maturities for the purpose of regulating levels of domestic liquidity. During H1 2018, a total of USD32.77 billion was raised by the GCC central banks, namely by the Central Bank of Kuwait, Bahrain, Qatar, and Oman. (The only publically available information is from the Central Bank of Bahrain, the Central Bank of Kuwait, the Central Bank of Oman, and the Central Bank of Qatar). The Central Bank of Kuwait raised the highest amount with KWD 4.77 billion (USD15.88 billion), representing 48.59% of the total amount raised by CBLIs through 22 issuances, followed by the Central Bank of Bahrain, which raised a total of BHD2.99 billion (USD7.95 billion).

GCC Bonds and Sukuk Market

The GCC Bonds and Sukuk market is composed of bonds and sukuk issued by GCC Sovereign, corporate entities and financial institutions, for financing purposes in local and foreign currencies. A total of USD62.57 billion was raised in the GCC bonds market in H1 2018, a growth of 33.27% from USD46.95 billion raised in H1 2017.

Geographical Allocation: Qatari issuers led the GCC in H1 2018, raising a total of USD19.97 billion through 47 issuances and representing 31.9% of the total value raised in the GCC.

Saudi Arabian entities raised USD17.37 billion from 10 issuances, up by 68.4% as compared to USD10.31 billion raised in H1 2017, making up 27.76% of the market The UAE based issuers raised USD15.39 billion during H1 2018, up by 21.9% as compared to USD12.6 billion raised in H1 2017 and represented 24.6% of the total market. Total issuances by Kuwaiti entities dropped to USD0.20 billion representing 0.3% of the total market as compared to USD10.50 billion raised in H1 2017 or 22.4% of the total market.

Omani issuances raised a total of USD8.63 billion through 7 issues representing 13.8% of the market and 13.2% above USD7.62 billion raised in H1 2017. Bahraini entities represented 1.6% of the total issuances, raising USD1 billion through a single issue.

Sovereign Vs. Corporate: Sovereign issues continued to dominate the GCC bonds and Sukuk market in H1 2018 contributing 60.2% to the overall market with a total value of USD37.68 billion as compared to USD24.0 billion in H1 2017. Total value raised by corporate entities in H1 2018 increased by 8.45%, to USD24.89 billion in H1 2018 from USD22.95 billion in H1 2017. Saudi Arabia Government raised a total of USD16.87 billion out of which SAR29.99 billion (USD5.87 billion) were through domestic bonds and USD 11 billion were through US Dollar denominated Bonds and Sukuk. Qatar, Oman, Sharjah and Bahrain governments raised USD12 billion, USD6.5 billion, USD 1 billion and USD 1 billion respectively. Kuwait was the only GCC sovereign entity not tapping the international bond markets in H1 2018.

Conventional Vs. Sukuk: Conventional issuances raised USD50.17 billion, or 80.19% of the total amount raised in GCC bonds and sukuk market during H1 2018. Sukuk raised USD12.39 billion, 30.84% lower as compared to USD17.93 raised in H1 2017 and represented a share of 19.81% of the market in H1 2018.

Sector Allocation: Government sector accounted for the largest amount raised during H1 2018, with USD37.68 billion representing 60.2% of the total amount raised as compared to USD24.89 billion issued in H1 2017. The Financial sector followed with USD18.29 billion representing 29.26% of total market raised through 140 issues.  

Maturity Profile: Issuances with tenures of less than five years raised the highest amount, USD25.7 billion, through 132 issuances, representing 41.1% of the total amount raised. Maturities of 11-30 years raised USD18.65 billion representing 29.8% of the market.

Issue Size Profile: GCC bonds and sukuk issuances during H1 2018 had issue sizes ranging from USD1 million to USD6 billion. Issuances with principle amounts greater than or equal to USD1.0 billion raised the largest amount of USD41.83 billion, representing 66.85% of the total value.

Currency Profile: US Dollar denominated issuances lead the GCC Bonds and Sukuk market, raising USD52.58 billion (84.19% of the total amount raised) by 113 issuances. Followed by Saudi Riyal raising USD5.87 billion (9.38% of the total amount raised) through 6 issuances.

Rating: During H1 2018, a total value of 85.2% of Sovereign and Corporate issuances, were rated by either one or more of the following rating agencies: Moody’s, Standard & Poor’s, Fitch, and Capital Intelligence out of which 94.6% issuances had investable grade ratin

Listing: During H1 2018, 42% of the total issuances or 99 GCC Bonds and Sukuk issuances, with an aggregate value of USD54.14 billion were listed on exchanges. Listing on international exchanges accounted for 96% with Dublin accounting for the listing of 35 of such issuances.

Bonds and Sukuk Total Amount Outstanding in the GCC

As of 30 June 2018, the total amount outstanding of corporate and sovereign bonds and sukuk issued by GCC entities was USD463.29 billion. Government issuances made up the majority of the total amount outstanding with USD236.02 billion, or 50.9% of the total amount. Financial sector led the corporate sector with a total amount outstanding of USD104.37 billion, or 22.5 % of the total amount.

Of the amount outstanding as of 30 June 2018, USD179.03 billion, or 38.60% were issued by Saudi Arabian entities. Bonds and Sukuk by Kuwaiti entities represented USD19.66 billion, or 4.24% of the total amount outstanding.

GCC Bonds and Sukuk Market Survey