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
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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.


German firm wins mega order to build olive oil mill in Saudi Arabia

Updated 7 min 31 sec ago
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German firm wins mega order to build olive oil mill in Saudi Arabia

  • Scope of project, located in Al-Jouf, expected to encompass 5 million olive trees
  • Saudi Arabia investing heavily in developing domestic food industry

Arab News LONDON: A German company has won an order to build a massive olive oil mill in Saudi Arabia that will be the largest in Asia.
GEA won the order from The National Agricultural Development Company (NADEC), one of the largest agricultural and food-processing companies in the Middle East.
The scope of the project, located in the region of Al-Jouf, is expected to encompass 5 million olive trees from a single farm of 3,000 hectares, GEA said in a statement on Tuesday.
“Once the construction process is completed, this facility will be largest and most modern olive oil mill in Asia,” said Rafael Cárdenas, head of the Center of Excellence for Olive Oil at GEA.
Gulf states including Saudi Arabia, the region’s largest economy, are investing heavily in developing their domestic food industries in an effort to reduce their reliance on imports and boost their food security.
The contract to build the Al-Jouf olive oil mill is the second phase of an ongoing project and will enlarge the existing olive oil plant that was built in 2016.
Al-Jouf Agriculture Development Company is the largest modern olive farm in the world.