GCC bond issuances likely to increase to meet funding needs

GCC companies are likely to issue more bonds in the coming months to meet their funding needs ahead of the year-end, says a new research. “We expect supply to pick up in the coming months as seasonality wanes and as issuers get pushed to complete their funding needs before the year end. There is $4.5 billion (Dh16.5 billion) coming up for redemption between now and end of the year, part of which, particularly the maturities relating to FGB (Now merged with National Bank of Abu Dhabi to become First Abu Dhabi Bank) and Taqa could get refinanced,” said Anita Yadav, head of fixed income research at Emirates NBD Research.

Anita said the new issue supply was expected to pick up in mid-August, but this got hijacked by the increasing volatility and risk aversion in financial markets on the back of geopolitical tension due to North Korea’s missile testing. Issuers were wary of approaching investors at such time for the fear of having to pay heavily or worse, not be successful in completing the deal at all.

In consideration of a bigger decline in GDP growth in the region than expected early in the year, Anita expects total new supply of bonds for the whole year to finish at around $65 billion (Dh238.55 billion).

Source Credit: Zawya
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