GCC sovereign issuance is expected to exceed 2017 levels this year after seeing a strong first half of the year, according to Fisch Asset Management.
The Zurich-based asset manager made the prediction after $30 billion was issued in the first six months of the year.
Fisch said it believes that Kuwait is likely to contribute meaningfully to the remaining issuance total in 2018.
Improved oil prices are set to play a critical role in the demand and supply dynamic for Kuwait and the wider GCC, having a direct impact on multiple budgetary factors across the region, as well as driving positive investor sentiment, it added in a statement.
In addition to Kuwait, Saudi Arabia may also consider returning to the market, following a jumbo-sized transaction during H1.
Fisch said it believes that Saudi Arabia may opportunistically tap the markets again in the second half, while Qatar is less likely to return.
On that basis, GCC sovereign issuance for the remainder of the year is likely to be dominated by Kuwait, Saudi Arabia and possibly the UAE.
Philipp Good, CEO at Fisch Asset Management, said: “This robust performance by the GCC primary markets stands out as particularly strong when compared to the broader emerging market trend, where aggregate issuance is lagging significantly behind 2017 levels.”
Fisch also noted the potential inclusion of the GCC region in the JP Morgan EMBI Index, with official phase-in expected to commence in early 2019, to be particularly relevant to future issuances.
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