The amount of debt issued by non-financial corporate entities in the Gulf Cooperation Council (GCC) virtually doubled last year as governments either sold stakes in related entities, or encouraged them to diversify funding sources, ratings agency Moody’s said.
In a press briefing held on Tuesday, senior analyst Rehan Akbar said that the ongoing fiscal deficits being run by most GCC countries “is linked to certain policies that over time” are impacting on corporate credit trends.
“The first is the trend towards monetisation of state-owned assets, be it through IPOs, partial sales to strategic partners or even sales from one government entity to another,” Akbar said. “All of these different transactions are leading – and will over time lead – to some sort of capital market issuances.”
The value of conventional and Islamic bonds (sukuk) issued by non-financial corporate entities rated by Moody’s in the region increased to $15.6 billion in 2018 – an 86 percent increase on the $8.4 billion issued in 2017.
Approximately $1.8 billion of the 2018 issuance was from entities tapping debt capital markets for the first time. These included Abu Dhabi real estate firm Aldar Investment Properties and district cooling firm Tabreed – each of which raised $500m through seven-year sukuk. Abu Dhabi’s industrial holding conglomerate Senaat also raised $300 million through a seven-year sukuk in November.
Source Pakistan Observer