BBH produced the following ratings model to assess relative sovereign risk in Frontier Markets. A country’s score directly reflects its creditworthiness and underlying ability to service its external debt obligations.
Almost 20 years ago, global fixed income investors scarcely heard of the word ‘sukuk’, let alone understood the asset’s unique structural features or benefits. Much has changed since, with the global sukuk issuance topping USD74.8bn at the end of 2016. But with the asset class’ impressive growth being hamstrung by liquidity shortages and a lack of global standards, the development and proliferation of those standards – and a protracted effort on behalf of market makers to harmonise those standards – is needed to help take the market to the next level.
The Abu Dhabi National Oil Company’s (ADNOC) hugely successful debut capital markets transaction, a USD 3bn dual-tranche bond, achieved a number of milestones – it was the largest single-currency corporate issuance in the GCC, one of the largest in the Middle East’s corporate history – and marked the start of a bold new financing strategy at the state-owned oil company.
Sukuk – sharia-compliant bonds – may have risen to prominence in majority-Muslim countries over the past two decades, but their appeal has clearly gained momentum among a diverse group of stakeholders – and for good reason. These instruments offer borrowers ethical, price-competitive ways of diversifying their investments and raising new capital - just some of the reasons why global sukuk issuance has spiked in recent years.
The first two stages of the Egyptian government’s solar and wind programme have been somewhat hit-and-miss, but increased development bank involvement sets the next stage on a path to encourage wider private sector participation. Third time’s a charm – but only if local and commercial lenders play their part, analysts suggest.
As state funding dwindled for many airlines that traditionally relied on government for support, they have been forced to find new pools of liquidity – or face financial ruin in a sector that has seen major upheaval over the past year.
With over USD33bn of issuances year to date in 2017 – from just under USD2.5bn in 2008 – the sovereign Sukuk market has grown rapidly over the past decade. Despite such progress, there remains room for further unprecedented growth. The market remains restricted by liquidity constraints, higher costs, and a lack of deep understanding of the Sukuk instrument. If proactive, however, borrowers can overcome these challenges in the pursuit of high-quality borrowing instruments.
Boosted by a positive global outlook and rising oil prices and despite growing geopolitical risk, top corporate, quasi-sovereign and sovereign CFOs, Group Treasurers and Heads of Debt Management in the Middle East were resolutely optimistic about the financial prospects of their organisations heading into Q4, according to our most recent Middle East CFO Market Sentiment Monitor.
Kuwait National Petroleum Company’s (KNPC) USD6.245bn ECA-backed loan was a triumph for the company’s Clean Fuel Project and the region’s credit markets, setting a new record for the largest ECA-backed corporate loan to date.
Kingdom Holdings halts borrowing plans – Citigroup will begin operations in KSA in early 2018 – London Court rules in favour of Dana’s bondholders – ADNOC secures USD6bn dual-tranche loan – Mazoon Electric Company issues a USD500mn sukuk – Lebanon carries out a debt swap – CIB to increase Tier 2 capital
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- Middle East Credit Markets Brief: 25 October – 08 November
- Private Participation in Water, Wastewater Projects: Applying the GCC Experience Across META
- CASE STUDY: Tabreed’s Innovative Islamic Loan Paves the Way for Future Sukuk Deal
- Middle East Credit Markets Brief: 11 October – 25 October
15 Feb 2018