Saudi borrowers fuel MENA syndicated loan boom

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

Saudi borrowers fuel MENA syndicated loan boom

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.


SABIC to begin construction of plastic recycling facility in the Netherlands

SABIC to begin construction of plastic recycling facility in the Netherlands
Updated 50 min 10 sec ago

SABIC to begin construction of plastic recycling facility in the Netherlands

SABIC to begin construction of plastic recycling facility in the Netherlands
  • The construction phase for the unit is expected to become operational in the second half of 2022
  • The project will be realized under a 50:50 joint venture

Saudi Basic Industries Corp. (SABIC) and Plastic Energy Ltd. announced plans to commence construction on the first commercial unit to produce its flagship certified circular polymers.

The construction phase for the unit, which will be located in the Netherlands, is expected to become operational in the second half of 2022.

The project will be realized under a 50:50 joint venture. It will be implemented with a top sector energy subsidy from the Ministry of Economic Affairs in the Netherlands.

The new unit will enable SABIC to significantly upscale the production of certified circular polymers to provide customers with greater access to sustainable materials which have been recycled, repurposed and produced in a way that can help protect our planet’s natural resources, while acting as a drop-in solution.