Saudi Arabia, four other Gulf states to enter key JP Morgan bond indexes

Saudi Arabia, Bahrain, Kuwait, Oman and Qatar have issued a quarter of all new debt sold by emerging market countries in each of the last three years. (AFP)
Updated 26 September 2018
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Saudi Arabia, four other Gulf states to enter key JP Morgan bond indexes

  • The indexes are key performance benchmarks for international investors in emerging market debt
  • Membership in them can help a country sell bonds and reduce its borrowing costs

DUBAI: Saudi Arabia and four other Gulf states will enter JP Morgan’s emerging market government bond indexes next year, a move likely to lure billions of dollars of new foreign investment into their debt, according to a JP Morgan statement sent to investors.
The indexes are key performance benchmarks for international investors in emerging market debt, so membership in them can help a country sell bonds and reduce its borrowing costs.
Sovereign and quasi-sovereign debt issuers from Saudi Arabia, Qatar, the United Arab Emirates, Bahrain and Kuwait will become eligible for the EMBI Global Diversified (EMBIGD), EMBI Global (EMBIG) and EURO-EMBIG indexes, according to the statement, which was seen by Reuters on Wednesday.
Their entry will be phased in between Jan. 31 and Sept. 30. Both conventional bonds and sukuk, or Islamic bonds, will be eligible for inclusion in indexes, but sukuk will need to have a credit rating from at least one of the three major rating agencies to be included.
JP Morgan’s decision follows a surge of debt issuance from the Gulf Arab region in the past few years, as low oil prices force most countries to fund part of their state spending in the international debt markets.
Saudi Arabia, Bahrain, Kuwait, Oman and Qatar have issued a quarter of all new debt sold by emerging market countries in each of the last three years.
The inclusion of Gulf Cooperation Council countries in the indexes will leave them representing around 11.2 percent of JP Morgan’s EMBI Global Diversified and EMBI Global series, the statement said.
“It is estimated that around $360 billion of assets under management are benchmarked against the EMBIG family, with the EMBIG diversified at around $300 billion,” said Zeina Rizk, director of fixed income asset management at Arqaam Capital in Dubai.
Rizk estimated this would translate into about $30 billion of inflows into the five countries’ debt.
“Those inflows are not going to come on day one, but the tailwind resulting from the inclusion headline, coupled with pegged currencies, strong oil prices, a relative immunity from trade wars and high credit quality, leads us to the view that the GCC has better value than the rest of emerging markets.”
The minimum size for inclusion in the indexes is $500 million, and during the inclusion process, instruments will need to have a maturity date beyond March 2022, the statement said.


In airline-business rarity, Air France picks a woman CEO

In this file photo taken on March 26, 2018, Air France's Executive Vice President Customer Division Anne Rigail speaks during a press conference to announce the re-opening of direct flight between Paris and Nairobi, in Nairobi on March 26, 2018. (AFP)
Updated 13 December 2018
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In airline-business rarity, Air France picks a woman CEO

  • As of June, there were just 18 women holding down jobs of CEO, president or managing director at airlines around the world, according to the Center for Aviation, an Australia-based airline industry research group

PARIS: When the leaders of global airlines posed for a photo in June, there were 25 men in dark suits and a lone woman in the last seat on the far right.
That could be changing, but very slowly.
Air France announced Wednesday that Anne Rigail will take over as CEO next week. Rigail, a 27-year company veteran and currently an executive vice president, will be the first woman to lead the French carrier, which was formed in 1933. Parent company Air France-KLM Group will continue to be led by a man, however.
Few women have run large airlines. Carolyn McCall was CEO of British low-cost carrier EasyJet for seven years until leaving this year to run British broadcaster ITV. Christine Ourmieres-Widener, the woman in the June photo of CEOs, leads Flybe, a European regional airline that has fewer than 100 planes.
In the United States, Air Wisconsin, a regional airline that operates United Express flights, is led by CEO Christine Deister, and another regional, Cape Air, has a female president, Linda Markham.
But no major US carrier has ever had a female CEO, and only a few women hold other top jobs. In May, JetBlue Airways named Joanna Geraghty president and chief operating officer — the No. 2 job. Tammy Romo has been chief financial officer at Southwest Airlines since 2012, succeeding another woman. Elize Eberwein is an executive vice president at American Airlines.
As of June, there were just 18 women holding down jobs of CEO, president or managing director at airlines around the world, according to the Center for Aviation, an Australia-based airline industry research group. That is unchanged from a 2010 survey.
Women in the industry have said airlines need to do more to recruit and promote women, provide better mentoring, and encourage those who take maternity leave to return to their careers.
The International Air Transport Association — that’s the group whose leaders were pictured in June — has declared gender equality a priority. The group reported in March that only 3 percent of aviation CEOs are women, compared with 12 percent in other industries.
It didn’t help, however, that the association’s new president, Akbar Al Baker, the CEO of Qatar Airways, suggested that women aren’t up to the job of running an airline.
“Of course it has to be led by a man, because it is a very challenging position,” he said at a news conference. He later apologized.
As the new CEO at Air France, Rigail will certainly have her challenges. The airline faces contentious wage negotiations with pilots and flight attendants and has been hit by a series of damaging strikes. The last CEO quit after union employees rejected his offer of small pay raises for the next four years.
In a statement issued by Air France, Rigail said she is extremely honored by the promotion. Benjamin Smith, the CEO of parent Air France-KLM Group, said Rigail has always paid special attention to employees, and he expressed confidence that the airline can meet its challenges.