Saudi borrowers fuel MENA syndicated loan boom

Saudi Arabia accounted for more than a third of regional syndicated loans issued last year as corporate borrowers from shippers to builders tapped debt. (Shutterstock)
Updated 10 January 2019
0

Saudi borrowers fuel MENA syndicated loan boom

  • Corporate bank borrowing across region hits record $127.2 billion last year
  • Saudi Arabia led a regional surge in syndicated loans last year that hit a record $127.2 billion across the Middle East and North Africa (MENA)

Newly published league tables from Bloomberg show that regional loans increased by more than half last year, surpassing the previous record set in 2007.
Saudi borrowers topped the league with more than a third of the market, while the UAE accounted for more than a quarter of the total and Oman almost 10 percent.
A weak oil price, falling property values and emerging market uncertainty rattled regional debt markets in 2018, while rising US interest rates put some borrowers under pressure.
However, some investors have seen the downturn as an opportunity to invest in Gulf corporate and sovereign debt.
Franklin Templeton, which has about $683 billion in assets under management, boosted exposure of its $350 million Gulf Cooperation Council (GCC) bond strategy to regional corporates by roughly 20 percent this year to 72 percent, Reuters reported
“Valuations are much better than they were 12-18 months ago. Pressure in some industries has led to a sell off, and the weaker the name, the easier it is for stress to build up fairly quickly, but this creates opportunity,” Dino Kronfol, its chief investment officer of global sukuk and MENA fixed income, told the newswire.
The regional economic downturn has meant that many corporates have started to restructure their borrowings, especially in the industries that have been hardest hit by the slowdown, such as construction and real estate.
The Bloomberg data reveals that while syndicated loans surged last year, bonds and sukuk registered a decline of 12.8 percent to $86.5 billion.
This was the second-highest amount on record, with the highest tally recorded in 2017, Bloomberg said.
UAE-based bond issuers had the biggest slice of the regional pie, followed by Qatar and Saudi Arabia.
While First Abu Dhabi Bank was the top regional loans bookrunner in 2018, Standard Chartered was the top underwriter in the bond and sukuk market across the Middle East and North Africa.
Bloomberg said that global Islamic financing jumped by almost 15 percent last year with some $32.95 billion in deals. Dubai Islamic Bank was the top underwriter in the sector.


Egyptian economy on right track after 5.6% growth in 2018-2019: prime minister

Updated 17 July 2019
0

Egyptian economy on right track after 5.6% growth in 2018-2019: prime minister

  • Egypt is emerging from a three-year economic reform program tied to a $12 billion loan from the IMF
  • Egypt has been praised by international lenders for swift reforms implemented since 2016

CAIRO: Egypt’s economy grew 5.6 percent in the 2018/19 fiscal year and is “on the right track” as it completes IMF-backed reforms, Prime Minister Mustafa Madbouli said on Wednesday.
The budget deficit came in at 8.2 percent of GDP, he said, which was slightly below an official forecast of 8.4 percent.
Egypt is emerging from a three-year economic reform program tied to a $12 billion loan from the International Monetary Fund.
Madbouli said Egypt’s primary surplus stood at 2 percent for the fiscal year, which ended in June, and also pointed to a recent drop in inflation as positive signs. Economic growth was up from 5.3 percent in 2017/18 and in line with a government forecast.
“At the same time, it induces us to complete the implementation of reforms and the efforts exerted to achieve the targets for the new fiscal year,” Madbouli said in a statement said.
Egypt has been praised by international lenders for swift reforms implemented since 2016, though austerity measures and inflation have left many Egyptians struggling to get by.
The reforms included a sharp devaluation of the currency, the introduction of value-added tax and the elimination of subsidies on most fuel products.
Headline annual inflation dropped to 9.4 percent in June from 14.1 percent the previous month, though it is expected to rise over the rest of the summer as the impact of the latest round of fuel subsidy cuts kicks in.