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“Markaz” published a market review for the GCC fixed income market in H1 2010 covering both conventional bonds & Shari’ah compliant sukuk.
GCC Aggregate Bonds & Sukuk Market H1 2009
Total value of GCC bonds and sukuk, issued during the first half of 2010 dropped by 32%, compared to the respective period of 2009, to USD24.2 billion. The month of April predominated in terms of issuance frequency and value, with 17 issuances and USD6.1 billion, raising 25.1% of H1 2010 total issuances value.
During H1 2010, sovereign/government issuances dominated the majority of the amount raised, with USD17.2 billion or a 71.0% of the total amount raised; this represents a continuation with the trend observed since 2003 except for the peak years of 2006-2007 and 2008, where corporate issuances dominated the market.
Continuing with the trend witnessed since 2003, conventional issuances raised the largest amount during H1 2010 with USD20.1 billion through 68 issues, which is five times the total value of sukuk issued during the same period.
Excluding sovereign/government issues, four sectors were active during H1 2010: the Financial Services sector which, continuing with the trend that has been witnessed since 2003, issued the greatest number and raised the largest amount, with USD3.3 billion through eight issuances, followed by the Power and Utilities sector with USD2.9 billion through two issuances, the Real Estate sector with USD0.6 million through three issuances, and finally the Oil and Gas sector with USD0.3 million through one issuance.
Kuwait first in value
In H1 2010, Kuwait raised the largest amount with USD10.8 billion, representing 44.7% of the total amount issued through 31 issuances, most of which were by Central Bank of Kuwait. Followed by Saudi Arabia with USD4.2 billion raised through five issuances.
However, in terms of frequency, Bahrain was the most active issuing 37 bonds and sukuk representing 45.1% of the total number of issuances and raising USD2.0 billion.
The Kuwaiti Dinar denominated issuances raised the largest amount in H1 2010 with USD10.8 billion, The US Dollar denominated issuances raised USD4.9 billion through 6 issuances, followed by the Qatari Riyal denominated issuances with USD3.3 billion and the Saudi Riyal denominated issuances raised USD3.1 billion. While the Bahraini Dinar denominated issuances were the most active, representing 42.7% of the total number of issuances.
Maturity Structure
Aggregate bond issuances during H1 2010 had tenors ranging from 3-months to 20-year. Issuances with 3-month maturities raised the largest amount with USD6.7 billion, representing 27.6% of the aggregate amount raised, as well as the largest number of issuances with 38 issuances, representing 46.3% of the total number of issuances. The 5-year maturity issuances raised the second largest amount with USD5.2 billion, through eight issuances.
Size
The bond and sukuk issuances during H1 2010 had sizes ranging from USD4.0 million to USD1.9 billion. Issuances with a principal amount of less than or equal to USD100 million were the most active with 39 issuances, while issuances with a principal value of more than USD500 million and equal to or less than USD1.0 billion raised the highest amount with USD7.8 billion, or 32.0% of the aggregate amount raised, through 12 issues.
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About Kuwait Financial Centre “Markaz”
Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD921 million (USD3.19 Billion) as of March 31, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.