Gulf state benefits from political unrest across Middle East as investors seek safe havens from turmoil
The UAE is attracting investors seeking a haven as violence roils governments across the rest of the Middle East.
Abu Dhabi and Dubai have escaped the revolts that toppled presidents in Egypt and Tunisia and have since spread to Syria, Oman, Yemen and Saudi Arabia, the Gulf region’s largest economy.
Companies in the UAE sold $7.35bn of bonds so far this year, more than three times the $2.1bn they raised in the same period in 2010, according to data compiled by Bloomberg. Bond sales in the wider Middle East and Africa region dropped 34 percent in the same period, the data show.
State-owned Dubai World signed a final agreement with its creditors in March to restructure about $25bn of debt, boosting investor confidence in Dubai and the rest of the UAE.
“The UAE is seen to be very stable and has come to be known as the Switzerland of the Middle East,” said Christopher Laing, head of Middle East and North Africa equity capital markets at Deutsche Bank. “In the long term that’s very positive. We are seeing flows back into Dubai.”
The amount raised in debt offerings in the whole Middle East and Africa region fell to $7.52bn this year from $11.39bn in the year-earlier period, Bloomberg data show.
UAE-based companies issued the most bonds in the Middle East and Africa this year, surpassing companies and governments in Bahrain and Saudi Arabia, the biggest sellers in the same period in 2010, the data show.
“There are winners and losers,” said Mark Watts, head of fixed-income at National Bank of Abu Dhabi’s asset management group, which manages AED4.1bn ($1.1bn) in assets worldwide. “There are those countries that have come out unscathed and those countries that are likely to continue to be treated with caution by the market.”
Deutsche Bank is the top-ranked underwriter on bond sales in the region this year, with $935.5m of deals, up from fourth place in 2010, Bloomberg data show. HSBC Holdings slipped to seventh place this year, from first spot in 2010. The London-based bank advised on $662.8m of deals this year, compared with $2.92bn a year earlier.
“The region has slowed, but this should not be seen as a halt,” said Simon Cooper, chief executive officer of HSBC Bank Middle East Ltd. “Many of the fundamentals of the region, such as a young population and hydrocarbon wealth, remain, and these will be at the heart of a recovery.”
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