Large-scale economic programs such as Saudi Vision 2030 and Dubai Expo 2020 will boost infrastructure and real estate
Issuance of corporate and sovereign bonds in Q4 2017 will remain high, partly because of strong interest from global investors, according to Fisch Asset Management CEO Phillip Good.
According to Fisch, great investor interest in, and awareness of, potential GCC convertible bond issuers in a number of sectors, such as infrastructure and real estate. There is currently particularly strong interest in GCC convertible and exchangeable bonds, especially when issued using standard structures rather than Sukuks.
Good added that “in contrast, there has been no GCC equity-linked issuance since 2015.”
“While the landscape for conventional bond issuance across the GCC remains encouraging, we believe that convertible and exchangeable bonds are an untapped opportunity for GCC issuers,” he said.
Among the opportunities presented by convertible bonds in the region are various liquid underlying stocks throughout the GCC, as well as rapidly expanding equity market in Saudi Arabia that is becoming more open to Qualified Foreign Investors (QFI’s).
“Middle East Convertibles have undergone a decade of evolution since the US$3.5bn pro-IPO sukuk into DP World launched the GCC convertible bond market in January 2006,” noted Martin Haycock, Senior Partner – Convertible Bonds at Fisch Asset Management. “Since this time, 20 issues with notional value of US$23bn have been issued in the region, with financial services and real estate companies comprising the majority of issuance.”
“We believe the time is right for this market to expand further,” he added.