Saudi Arabia will probably boost its dollar-denominated debt sales next year amid more than $500 billion of expansion projects in the largest Arab economy, Deutsche Bank AG said.
Less than 30 per cent, or $2.5bn, of the kingdom's record issuance Islamic bond sales this year were denominated in the US currency, data compiled by Bloomberg show. In the UAE, the second-largest Arab economy, the majority of sukuk offerings this year were denominated in dollars as Gulf yields drop to a record, the data show.
Saudi Arabia, the world's biggest oil exporter, is building roads, homes airports and industrial cities as it seeks to create jobs and boost the economy. Some of this project financing needs to take place in dollars as companies import equipment for power plants and refineries. Saudi Arabian Oil Co, known as Aramco, and Dow Chemical are seeking $2bn in Islamic debt to help finance their $20bn petrochemicals joint venture.
"Next year and the following years I expect to see a balance between riyal and dollar issuances," Salah Jaidah, Deutsche Bank's chairman for Islamic finance said. "The large to mega projects will use dollars and the small to medium will use riyals."
The average yield on corporate sukuk in the six-nation Gulf Cooperation Council (GCC) has declined 280 basis points, or 2.8 percentage points, this year to 3.24 per cent on December 11 after touching an allow-time low of 3.2 per cent four days earlier, according to the HSBC/Nasdaq Dubai GCC Corporate US Dollar Sukuk Index. The drop helped GCC sales soar to a record $21bn, according to data compiled by Bloomberg.
Saudi Electricity, the state-controlled utility, raised $1.75bn in sukuk in March amid plans to spend more than 55bn Saudi riyals on power projects. Banque Saudi Fransi, partly owned by Credit Agricole SA, sold $750 million in May partly to expand project finance lending.
Middle East sukuk sales may surge at least 35 per cent next year amid public spending on projects, Mr Jaidah said. "You also have a strong liquidity in countries like Saudi Arabia."
At about $207bn last year, Shariah-compliant financial assets in the kingdom are the world's largest, about $100m more than Malaysia, Ernst & Young said in a report released December 10. Global Islamic banking assets may reach $1.8 trillion next year, compared with $1.3tn in 2011, it said.
* Bloomberg News
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
If you go…
Emirates launched a new daily service to Mexico City this week, flying via Barcelona from Dh3,995.
Emirati citizens are among 67 nationalities who do not require a visa to Mexico. Entry is granted on arrival for stays of up to 180 days.
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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Publisher: LucasArts
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F1 drivers' standings
1. Lewis Hamilton, Mercedes 281
2. Sebastian Vettel, Ferrari 247
3. Valtteri Bottas, Mercedes 222
4. Daniel Ricciardo, Red Bull 177
5. Kimi Raikkonen, Ferrari 138
6. Max Verstappen, Red Bull 93
7. Sergio Perez, Force India 86
8. Esteban Ocon, Force India 56
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Engine: 2.0-litre 4cyl turbo
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360Vuz PROFILE
Date started: January 2017
Founder: Khaled Zaatarah
Based: Dubai and Los Angeles
Sector: Technology
Size: 21 employees
Funding: $7 million
Investors: Shorooq Partners, KBW Ventures, Vision Ventures, Hala Ventures, 500Startups, Plug and Play, Magnus Olsson, Samih Toukan, Jonathan Labin
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