DOHA: Issuance of GCC debt, both bonds and sukuk, was weaker in the third quarter, though year-on-year growth in the stock of outstanding instruments maintained a strong pace compared to the corresponding period in 2012.
GCC debt remains concentrated in a few markets, including Qatar, UAE and Saudi Arabia. Of the three, the UAE remains the prominent borrower, with significant debt positions in the public, financial, and non-financial sectors.
The NBK’s GCC Economic Update on “GCC Debt Market” noted the stock of outstanding GCC bonds reached $243.5bn at the end of third quarter this year. The balance of outstanding bonds was up $23.5bn thus far in 2013 and 16 percent against a year ago. Only $3.5bn was added during the third quarter of 2013.
Issuance totaled $38.8bn during the first nine months, with growth slowing to 5.2 percent compared to the same period last year. Issuance in the third quarter was at its lowest in two years, $8.5bn.
Issuance was driven by the public and non-financial sectors, with the public sector dominating. Meanwhile, the financial sector saw a mostly inactive quarter.
The average maturity of outstanding GCC debt securities remained steady at 5.8 years at the end of the first nine months of 2013.
The non-financial sector saw the average life of its bonds jump to 8.8 years, on the back of longer term issues such as perpetual sukuk.
GCC sovereign yields decreased after rising in early September following expectations of a fed taper and a military strike on Syria.
Sovereign bonds that mature in 6-7 years for Qatar, Dubai and Abu Dhabi have seen their yields drop between 80 basis points (bps) and 24 bps to reach 4.6 percent, 2.78 percent and 2.37 percent respectively, with Dubai experiencing the biggest drop.
The Peninsula
