Sukuk issuances by Arabian Gulf firms are set to decline this year from 2017 as geopolitical risks and the aftermath of the Dana Gas Islamic bond saga dampen investor appetite, according to S&P Global Ratings.
Islamic bond issuances in the first half of 2018 were "subdued" with five issuers raising around $2.6 billion, representing a 60 per cent decline to the $6.5bn in the same period last year, according to a report by the credit rating agency.
"While the market is talking about a few selective issuances in the second half the year, we still expect to see weaker issuance volumes relative to 2017, barring any unexpected improvement in the global and regional economic outlook," Timucin Engin, credit analyst at S&P Global, said.
In 2017 the Gulf region's corporate and infrastructure issuers raised more than $7.6bn from sukuk and this year's volumes will fall short of those levels.
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One main factor behind the decline is that international investors' perception of risk in the GCC is increasing due to geopolitics and the US re-imposing sanctions on Iran, the report said.
"We also believe that increasing global trade tensions are generally not supportive of emerging capital markets, including the GCC region," it said.
The legal problems surrounding the sukuk of Sharjah-based energy company Dana Gas, which reached a restructuring deal outside of a UK court with its creditors, has also been a wakeup call to the market.
"Dana Gas has also highlighted the risks related to enforceability of foreign judgement in emerging markets," S&P said. "We think that this will result in investors paying closer attention to the content of legal documents in the near to medium term and having lower risk appetite for GCC issues."
Also, many GCC corporate issuers have "diminished" funding needs as companies scale back on investments. The introduction of a five per cent VAT, energy subsidy reforms and other measures by the governments to enhance revenues have resulted in pressure and uncertainty in some sectors, the report said.
"Despite stronger oil prices, we believe many GCC corporates remain cautious, translating into muted investment programmes in some sectors," it said. "Expectations that global and regional interest rates will continue to normalise at higher levels is also causing issuers to pump the breaks on spending."
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- Lower Bowl Standard- Dh595
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VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
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SERIES SCHEDULE
First Test, Galle International Stadium
July 26-30
Second Test, Sinhalese Sports Club Ground
August 3-7
Third Test, Pallekele International Cricket Stadium
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First ODI, Rangiri Dambulla International Stadium
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Second ODI, Pallekele International Cricket Stadium
August 24
Third ODI, Pallekele International Cricket Stadium
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Fourth ODI, R Premadasa Stadium
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Fifth ODI, R Premadasa Stadium
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T20, R Premadasa Stadium
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If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
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Earth under attack: Cosmic impacts throughout history
- 4.5 billion years ago: Mars-sized object smashes into the newly-formed Earth, creating debris that coalesces to form the Moon
- 66 million years ago: 10km-wide asteroid crashes into the Gulf of Mexico, wiping out over 70 per cent of living species – including the dinosaurs.
- 50,000 years ago: 50m-wide iron meteor crashes in Arizona with the violence of 10 megatonne hydrogen bomb, creating the famous 1.2km-wide Barringer Crater
- 1490: Meteor storm over Shansi Province, north-east China when large stones “fell like rain”, reportedly leading to thousands of deaths.
- 1908: 100-metre meteor from the Taurid Complex explodes near the Tunguska river in Siberia with the force of 1,000 Hiroshima-type bombs, devastating 2,000 square kilometres of forest.
- 1998: Comet Shoemaker-Levy 9 breaks apart and crashes into Jupiter in series of impacts that would have annihilated life on Earth.
-2013: 10,000-tonne meteor burns up over the southern Urals region of Russia, releasing a pressure blast and flash that left over 1600 people injured.
hall of shame
SUNDERLAND 2002-03
No one has ended a Premier League season quite like Sunderland. They lost each of their final 15 games, taking no points after January. They ended up with 19 in total, sacking managers Peter Reid and Howard Wilkinson and losing 3-1 to Charlton when they scored three own goals in eight minutes.
SUNDERLAND 2005-06
Until Derby came along, Sunderland’s total of 15 points was the Premier League’s record low. They made it until May and their final home game before winning at the Stadium of Light while they lost a joint record 29 of their 38 league games.
HUDDERSFIELD 2018-19
Joined Derby as the only team to be relegated in March. No striker scored until January, while only two players got more assists than goalkeeper Jonas Lossl. The mid-season appointment Jan Siewert was to end his time as Huddersfield manager with a 5.3 per cent win rate.
ASTON VILLA 2015-16
Perhaps the most inexplicably bad season, considering they signed Idrissa Gueye and Adama Traore and still only got 17 points. Villa won their first league game, but none of the next 19. They ended an abominable campaign by taking one point from the last 39 available.
FULHAM 2018-19
Terrible in different ways. Fulham’s total of 26 points is not among the lowest ever but they contrived to get relegated after spending over £100 million (Dh457m) in the transfer market. Much of it went on defenders but they only kept two clean sheets in their first 33 games.
LA LIGA: Sporting Gijon, 13 points in 1997-98.
BUNDESLIGA: Tasmania Berlin, 10 points in 1965-66
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
UAE currency: the story behind the money in your pockets
