The aggregate primary issuance of bonds and sukuk in the GCC totalled $97.7 billion in 2013, a 14.5 per cent increase from the total amount raised in 2012, the Kuwait Financial Centre (Markaz) announced in a report.
The month of March predominated in terms of issuance frequency with 44 issuances, Markaz said. However, October witnessed the highest value as $13.5 billion worth of instruments were issued, representing 13.8 per cent of the total amount issued, through 29 issuances.
Central Banks Local Issuances (CBLI): A total of $51.5billion was raised by the GCC central banks of Kuwait, Bahrain, Qatar, and Oman during 2013, with the Central Bank of Kuwait raising the highest amount: $25.4 billion, representing 49.3 per cent of the total CBLI amount through 66 issuances. The Central Bank of Qatar raised a total of $16.20 billion, a considerable increase of 172.55 per cent from $5.94 billion raised in 2012.
Central Bank Local Issuances are debt securities issued by GCC central banks in local currencies and maturities of less than 1 year, to regulate the levels of domestic liquidity.
A total of $46.1 billion was raised by Sovereign and Corporate bond and sukuk issuances in 2013, an increase of 2.3 per cent from the total value raised in 2012. The GCC bonds market is composed of sovereign and corporate bonds and sukuk issuances denominated in local and foreign currencies.
Geographical Allocation: Issuances by UAE entities raised the largest amount in 2013 representing 41.4per cent of the total amount, or $18.8 billion, and were the most active in terms of issuance frequency with 111 issuances representing 67.8per cent of the total number of issuances. Saudi Arabian entities raised the second highest amount during 2013, $17.2 billion while Qatari entities raised $6.7 billion. From Kuwait, United Real Estate Company was the sole corporate issuer which issued a 5 year bond with fixed and floating tranches, raising a total of KWD60 million ($210 million).
Sovereign Vs Corporate: During 2013, corporate issuances dominated the majority of the amount raised, with $42.9 billion or 93.0per cent of the total amount raised. Sovereign issuances raised $3.3 billion representing 7.0per cent of the total amount through 4 issuances compared to $6.7 billion raised in 2012 through 8 issuances. Three of the four sovereign issuances were from UAE while the fourth one was from Bahrain.
Conventional Vs Sukuk: Conventional issuances raised $23.7 billion, or 51.4per cent of the total amount raised in GCC bonds and sukuk market during 2013.This was an increase of 2.5per cent as compared to 2012. Conventional issuances slightly surpassed the value raised by sukuk which totalled $22.3 billion in 2013.
Sector Allocation: The Financial Services entities accounted for the largest amount raised during the year, with $19.8 billion representing 42.9 per cent of the total amount raised, through 122 issuances. The Government sector accounted for the second largest amount with $7.3 billion through five new issues.
Maturity Profile: Bonds with tenures of five-years raised the highest amount, $13.3 billion, through 30 issuances, representing 28.8per cent of the total amount raised. There were three new GCC issuances with 30-year maturity, raising a total of $2.0 billion. 2013 also witnessed the issuance of five perpetual issues which raised a total of $3.1 billion.
Issue Size Profile: GCC bonds and sukuk issuances during 2013 had issue sizes ranging from $2.0 million to $4.0 billion. Bonds and sukuk with issue sizes equal to or greater than $1 billion, raised the highest amount at $19.8 billion with 15 issuances, representing 43.1per cent of the total amount of issuances. Saudi Arabia’s General Authority of Civil Aviation Sukuk was the largest issuance in 2013, raising a total of SAR15.2 billion ($4.1 billion).
Currency Profile: The GCC bond and sukuk market in 2013 was dominated by the US Dollar denominated issuances: a total of $31.1billion was raised, representing 67.4 per cent of the total amount. Saudi Riyal-denominated issuances followed with $10.6 billion, followed by EURO denominated issues which raised $1.2 billion.
Rating: During 2013, a total of 61 issuances, or 36.9per cent of the total 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.
Listing: During 2013, 73 bonds and sukuk, representing 44.2 per cent of all the bonds and sukuk issued and a total of $39.9 billion, were listed on exchanges. The number of regional bonds and sukuk listed on international exchanges were 61 issues with a total value of $28.3 billion versus 12issuances listed on regional exchanges with a total value of $11.6 billion.
As of December 31, 2013, the total amount outstanding of corporate and sovereign bonds issued by GCC entities was $241.8 billion. Corporate issuances make up the majority of the total amount outstanding with $177.4 billion, or 73.4 per cent of the total amount. Sovereign issuances amount to $64.39 billion or 26.6 per cent of the total amount.
(Oman Daily Observer / 31 March 2014)---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com