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 H1 2019.
The aggregate primary issuance of bonds and sukuk by GCC entities, including Central Banks Local Issuances, GCC Sovereign and Corporate Issuances, totaled USD94.79 billion in H1 2019, marginally lower (0.47%) from the total amount raised in H1 2018. Saudi entities were the top issuers in terms of total value issued.
GCC Central Banks Local Issuances (CBLI’s) decreased by 8.9% to USD29.77 Billion
Central Bank Local Issuances are issued by GCC central banks in local currencies and with short maturities for regulating levels of domestic liquidity. During H1 2019, a total of USD29.77 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 Bahrain raised the highest amount with USD11.96 billion (BHD 4.51 billion), representing 40.19% of the total amount raised by CBLIs through 44 issuances, followed by the Central Bank of Kuwait, which raised a total of USD8.13 billion (KWD2.47 billion).
GCC Sovereign and Corporate Bonds & Sukuk Market
A total of USD65.03 billion was raised in the GCC sovereign and Corporate bonds and sukuk market in H1 2019, an increase of 3.94% from USD62.57 billion raised in H1 2018.
First quarter of 2019 recorded the highest value of GCC issuances with total value of USD 38.49 billion through 111 issuances, while a total of USD26.54 billion was issued in the second quarter through 118 issuances.
Geographical Allocation: Saudi Arabia based issuers led the GCC in H1 2019, raising a total of USD30.81 billion through 15 issuances and representing 47% of the total value raised in the GCC, followed by Qatar with 26% and UAE with 25%. Kuwaiti Issuers made up 0.46% of the primary market with a single issuance during H1 2019.
Sovereign Vs. Corporate: Sovereign issues contributed 60.2% to the overall market with a total value of USD30.13 billion as compared to USD37.68 billion in H1 2018. Total value raised by corporate entities in H1 2019 increased by 40%, to USD34.91 billion in H1 2019 from USD24.89 billion in H1 2018. Saudi Arabian Government raised USD16.93 billion out of which USD9.43 billion (SAR35.35 billion) was through domestic bonds and USD7.5 billion through US Dollar denominated Bonds and Sukuk. Government of Qatar issued bonds totaling to USD12 billion with maturities of 5, 10 and 30 years while Government of Sharjah issued USD1.2 billion in through two sukuks maturing in 2025 and 2026.
Conventional Vs. Sukuk: Conventional issuances were lower by 4.29% versus last year as it raised USD48.02 billion, representing 73.84% of the total amount raised. During H1 2019, Sukuk issuances raised USD17.01 billion, 37.21% higher as compared to USD12.40 raised in H1 2018 and represented a share of 26.15% of the market in H1 2019.
Sector Allocation: Government sector accounted for the largest amount raised during H1 2019, with USD30.13 billion representing 46.3% of the total amount raised as compared to USD37.68 billion issued in H1 2018. The Financial sector followed with USD20.1 billion (30.9% of total market) raised through 207 issues.
Maturity Profile: Issuances with tenures of more than ten years raised the highest amount, USD26.22 billion, through 35 issuances, representing 40.3% of the total amount raised. Issuances with maturities less than 5 years represented 32.8% with USD 21.35 billion.
Issue Size Profile: The sizes of GCC bonds and sukuk issuances during H1 2019 ranged from USD5 million to USD6 billion. Issuances with principle amounts greater than or equal to USD1.0 billion raised the largest amount – USD47.54 billion, representing 73.10% of the total value.
Currency Profile: US Dollar denominated issuances lead the GCC Bonds and Sukuk market, raising USD50.5 billion (77.66% of the total amount raised) through 137 issuances. Followed by issuances in Saudi Riyal raising USD9.55 billion (SAR 35.85 billion) through 6 issuances and represented 14.70% of the total amount raised.
Rating: During H1 2019, a total value of 77.8% of the 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 94.62% issuances had investable grade ratings.
Listing: During H1 2019, 59% of the total issuances or 136 GCC Bonds and Sukuk issuances, with an aggregate value of USD61.22 billion were listed on exchanges. Listing on international exchanges accounted for 92.06% with London accounting for the listing of 47 of such issuances.
Bonds and Sukuk Total Amount Outstanding in the GCC
As of 30th June 2019, the total amount outstanding of corporate and sovereign bonds and sukuk issued by GCC entities was USD528.95 billion. Government issuances made up 50.7% of the total amount. Financial sector led the corporates with a total amount outstanding of USD123.05 billion, or 23.3% of the total amount.
Of the amount outstanding as of 30th June 2019, USD217.41 billion, or 41.10% were issued by Saudi Arabian entities. Bonds and Sukuk by Kuwaiti entities represented USD20.56 billion, or 3.89% of the total amount outstanding.
Report