Total new GCC debt issuance in 2018 is forecast to drop by more than 10 per cent to $80 billion, thanks to higher oil prices and fiscal consolidation measures, according to fund manager Franklin Templeton Investments.
The majority of issuances will be sovereign, including an expected multi-tranche dollar bond from Saudi Arabia, said Mohieddine Kronfol, chief investment officer of global sukuk and Mena fixed income at Franklin Templeton.
Last year's issuances averaged $90bn.
“We’re expecting it [GCC bond issuance] to be quite close [to 2017] but slightly lower, based on the fact that our oil price assumptions are elevated to $70 to $75 per barrel so we think deficits will be slightly lower, therefore funding needs will be slightly lower,” he said on Tuesday.
“Right now we’re on pace to issue a little bit more, but by the time the year comes to an end we’ll probably be around the $80bn mark." The $80bn figure includes sukuk and conventional sovereign and corporate issues.
Saudi Arabia, the world's biggest oil exporter, was expected to reveal on Tuesday initial price guidance for a planned multi-tranche dollar bond, the latest issuance since Saudi Arabia’s $17.5bn bond sale in 2016, which established the kingdom as one of the biggest emerging market debt issuers, news agencies reported.
Documents from one of the banks leading on the deal showed that the kingdom plans to issue seven-year, 12-year and 31-year notes, all of benchmark size, which typically means upwards of $500 million, the news agencies said.
Franklin expects the size of the issuance to be around $4bn and the deal could elicit significant interest from investors, Mr Kronfol said.
Arabian Gulf governments are issuing debt to plug fiscal shortfalls caused by the three-year oil slump since 2014. But as oil prices hover around $70 a barrel, their need to finance the shortfall through debt issuances has diminished.
Besides sovereign sales, corporate issuances are rising and account for $204bn of the total $320bn of outstanding GCC debt, Franklin said.
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Overall, the region is increasingly attractive for bond investors as governments implement fiscal reforms and debt levels become more sustainable.
“The worst is over,” Mr Kronfol said. GCC budget deficits have shrunk by 43 per cent since 2016 and further consolidation is expected in 2018 and 2019, albeit at a slower pace.
“We’re in a pretty comfortable position from a debt sustainability point of view,” he said. Collectively, the GCC has reserves above 200 per cent of GDP, while the debt to GDP level sits at around 25 per cent.
“Debt is still modest relative to emerging and developed markets, and assets have been drawn down but are still generous for the sovereign investor,” he said.
Despite this, investors are typically “underweight” GCC debt and need to make a conscious decision to increase their allocation, Mr Kronfol said.
“What goes frequently unrecognised is that the region has been delivering some really strong risk-adjusted returns,” he said.
“GCC debt has performed even better during stressful scenarios, which is counterintuitive because people tend to think the GCC is a very volatile region due to fluctuating oil prices and geopolitics. Investors incorrectly think adding GCC debt increases, rather than reduces, portfolio risk.”
The most significant events in the GCC capital markets are Saudi Arabia’s inclusion in the MCSI Emerging Markets index expected next June, and the planned listing of its state oil company Saudi Aramco.
Aramco will account for 2.5 per cent of the index after its inclusion, which is expected to generate $50bn of capital inflows, Franklin says.
However, if Aramco lists, the figures could rise to 5 per cent and $200bn respectively – a huge boost to capital inflows. The fund manager advocates a dual listing on local and international exchanges “to deepen liquidity and improve the governance structure”.
What are the influencer academy modules?
- Mastery of audio-visual content creation.
- Cinematography, shots and movement.
- All aspects of post-production.
- Emerging technologies and VFX with AI and CGI.
- Understanding of marketing objectives and audience engagement.
- Tourism industry knowledge.
- Professional ethics.
Where to apply
Applicants should send their completed applications - CV, covering letter, sample(s) of your work, letter of recommendation - to Nick March, Assistant Editor in Chief at The National and UAE programme administrator for the Rosalynn Carter Fellowships for Mental Health Journalism, by 5pm on April 30, 2020.
Please send applications to nmarch@thenational.ae and please mark the subject line as “Rosalynn Carter Fellowship for Mental Health Journalism (UAE programme application)”.
The local advisory board will consider all applications and will interview a short list of candidates in Abu Dhabi in June 2020. Successful candidates will be informed before July 30, 2020.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Killing of Qassem Suleimani
More on animal trafficking
Museum of the Future in numbers
- 78 metres is the height of the museum
- 30,000 square metres is its total area
- 17,000 square metres is the length of the stainless steel facade
- 14 kilometres is the length of LED lights used on the facade
- 1,024 individual pieces make up the exterior
- 7 floors in all, with one for administrative offices
- 2,400 diagonally intersecting steel members frame the torus shape
- 100 species of trees and plants dot the gardens
- Dh145 is the price of a ticket
Killing of Qassem Suleimani
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
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The years Ramadan fell in May
The years Ramadan fell in May
Sustainable Development Goals
1. End poverty in all its forms everywhere
2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
3. Ensure healthy lives and promote well-being for all at all ages
4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
5. Achieve gender equality and empower all women and girls
6. Ensure availability and sustainable management of water and sanitation for all
7. Ensure access to affordable, reliable, sustainable and modern energy for all
8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
10. Reduce inequality within and among countries
11. Make cities and human settlements inclusive, safe, resilient and sustainable
12. Ensure sustainable consumption and production patterns
13. Take urgent action to combat climate change and its effects
14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
17. Strengthen the means of implementation and revitalise the global partnership for sustainable development
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
More on animal trafficking
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More on Quran memorisation:
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Hydrogen: Market potential
Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.
"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.
Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.
The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.
Brief scores:
Arsenal 4
Xhaka 25', Lacazette 55', Ramsey 79', Aubameyang 83'
Fulham 1
Kamara 69'
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Mohammed bin Zayed Majlis
COMPANY PROFILE
Name: Akeed
Based: Muscat
Launch year: 2018
Number of employees: 40
Sector: Online food delivery
Funding: Raised $3.2m since inception
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
- Stay invested: Time in the market, not timing the market, is critical to long-term gains.
- Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
- Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
