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Wednesday, 30 January 2019

Emirates NBD boss sees USD 80-85 bn MENA bond issuance in 2019

Emirates NBD boss sees USD 80-85 bn MENA bond issuance in 2019: MENA countries will issue USD 80-85 bn in USD-denominated bonds and sukuk this year, Emirates NBD Asset Management CEO Parth Kinani said, according to Zawya. The Emirates NBD boss gave the figure during the launch of a white paper that shows MENA countries issued bonds worth roughly the same value (USD 84 bn) in 2018. The report, co-authored by Fisch Asset Management and Kamco Investment Company, takes stock of the MENA bond market in 2018 (hint: There was plenty of demand, with issuances having been 2-2.5x oversubscribed) and gives an outlook for the remaining 11 months of 2019.

Deficit financing to drive new bond issuances: Many MENA states will turn to bond issuances to finance deficits in 2019, the paper says. Egypt, for example, will fund a “sizeable portion” of its USD 24 bn FY2019-20 budget deficit through eurobonds, while Saudi Arabia will rely on bonds and sukuk to finance most of its USD 35 bn deficit.

EM index inclusion to boost inflows: The report says that GCC countries stand to benefit from joining EM indexes in 2019, suggesting that an additional USD 30 bn may flow into GCC bonds by virtue of joining the JPMorgan EM bond index alone. The addition of GCC countries will also have positive effects on borrowing costs as improved credit quality pushes risk premiums down.

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