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Mon 9 Jan 2017 02:19 PM

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GCC states said to drive debt issuance market in 2017

Saudi Arabia, Bahrain and Kuwait are likely to hit the Islamic bonds market this year

GCC states said to drive debt issuance market in 2017
(Getty Images)

The governments from the six-nation Gulf Cooperation Council (GCC) are likely to lead the debt issuance market in 2017, favouring conventional bonds over sukuk (Islamic bonds), it has been reported.

In 2016, governments scrambled to cover budget deficits due to low oil prices, turning to conventional debt - a shift from the traditional pattern in which sukuk and conventional bonds had roughly equal shares of the region's international bond issuance.

In October last year, Saudi Arabia raised $17.5 billion through the conventional bonds, overtaking Qatar’s $9bn sovereign bonds issued in May.

Saudi Arabia has already given hints on a new bond issuance this year, while Bahrain and Kuwait expected to hit the market as well.

Junaid Ansari, Assistant Vice President, Kamco reportedly said the prospects for region’s bond issuances in 2017 appeared bright based on further funding requirement in the region by sovereigns and corporates.

A recent report by Moody's put Gulf governments rising $1.1bn, or 5 percent of their total debt issuance through sukuk in the first six months of 2016.

Standard & Poor’s estimated GCC corporate and project-related sukuk issuance totaled $2.5bn in the first eight months 2016, up marginally from $2.3bn a year ago.

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