Kuwait Financial Centre “Markaz” participated as a Platinum Sponsor in ‘Gulf Debt Capital Summit’ organized by Gulf Bond and Sukuk Association (GBSA) at The Ritz Carlton, Dubai on 6 November. GBSA’s summit was attended by executives, government officials, diplomats and senior representatives of the capital market regulators of Kuwait, Oman, Saudi Arabia and United Arab Emirates, including Mr. Mubarak Al-Refai – Acting Head of the Supervision Sector, Capital Market Authority, Kuwait, Mr. Sabty Al- Sabty – Deputy, Listed Companies & Investment Products, Capital Market Authority, Saudi Arabia, Mr. Khaled Al zaabi – Director of Supervision, securities and commodities Authority, UAE and H.E. Abdullah Al Salmi – Executive President, Capital Market Authority, Oman. The regulators announced several initiatives that will offer bond and sukuk issuers further flexibility that will streamline the procedures to access their markets.
Mr. Ali H. Khalil, COO, Markaz said in a key note speech during the summit, “We have seen the Bond and Sukuk issuances in the GCC reach at historic high levels for the 10 months period in 2017, reaching $92 billion; 65% of these issuances are sovereign. We expect the issuances to continue grow to meet the funding requirement of large projects. Our markets still have substantial borrowing capacity; the GCC total public debt to GDP stands at 26%, which is well below the world average, which stands at 60%. From a demand side, debt securities represent only 7% of financial asset classes in the MENA region versus the world average of 35%. In the absence of liquid debt securities, our regional asset allocations will remain skewed towards equity and real estate, periodically, creating bubbles.”
Mr. Khalil added, “We all know the virtues of the debt capital market. It reduces financing cost, improves transparency especially on public projects, and hence, making accountability possible, fostering greater efficiency, and preserving capital within the region.”
Mr. Khalil pointed out, “In Kuwait, the debt capital market remains limited. All the stakeholders in Kuwait are well aware that the primary objectives of regulations and laws around the debt issuances are to create a liquid market, reduce the cost and burdens of issuances, and minimize the risk premium. In Kuwait, CMA and Boursa Kuwait have been open minded and interacted with the key stakeholders, taking into consideration local factors along with international best practices, to develop the necessary framework that leads to a liquid bond and Sukuk market.
Mr. Khalil added, “Markaz sponsorship to this summit comes from its belief in the importance of debt market and the need to collaborate with all stakeholders in order to establish an active and thriving debt capital market in the region. We are proud to collaborate with GBSA, which acts as a platform for constant discussion to exchange views and explore the latest trends in the investment field from the sector experts.”
The Summit’s panel discussions covered the funding environment for regional companies, global and regional investor views on the region, structured and covered bonds/sukuk, the outlook for market liquidity, financing green investment and current issues in the sukuk market. Highlighted issues were the need for more GCC corporate issuances across the credit rating spectrum, the importance of standardization of Sukuk documentation in enhancing the global demand for sukuk, a call by local and global investment managers to improve transparency and increase research coverage on the market and issuers, in addition to highlighting the critical role repos play in promoting market liquidity and the urgent need to do necessary adjustment to better enforceability.
GBSA’s Gulf Debt Capital summit was marked with active participation of senior representatives of the capital market regulators of Kuwait, Oman, Saudi Arabia and the United Arab Emirates and attracted experts including Dr. Jihad Azour, Director of the Middle East and Central Asia Department, International Monetary Fund and Lebanon’s ex-finance Minister who participated through a video interview.