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

  • 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.


Boeing finds a new issue with 737 MAX aircraft

Updated 12 min 27 sec ago

Boeing finds a new issue with 737 MAX aircraft

  • The fuel tank debris was discovered during maintenance on parked planes
  • Boeing built about 400 undelivered MAX jets before it temporarily halted production last month

Boeing said Tuesday that it found debris contaminating the fuel tanks of some 737 MAX jets that it built in the past year but was unable to deliver to airline customers.
A Boeing official said the debris was discovered in “several” planes but did not give a precise number. Boeing built about 400 undelivered MAX jets before it temporarily halted production last month.
The fuel tank debris was discovered during maintenance on parked planes, and Boeing said it immediately made corrections in its production system to prevent a recurrence. Those steps include more inspections before fuel tanks are sealed.
A Boeing spokesman said that the issue would not change the company’s belief that the Federal Aviation Administration will certify the plane to fly again this summer.
An FAA spokesman said the agency knows that Boeing is conducting a voluntary inspection of undelivered MAX planes.
The FAA “increased its surveillance based on initial inspection reports and will take further action based on the findings,” said spokesman Lynn Lunsford.
Metal shavings, tools and other objects left in planes during assembly can raise the risk of electrical short-circuiting and fires.
Mark Jenks, Boeing’s general manager of the 737 program, said in a memo to employees who work on the 737, “During these challenging times, our customers and the flying public are counting on us to do our best work each and every day.”
Jenks called the debris “absolutely unacceptable. One escape is one too many.”
The debris issue was first reported by aviation news site Leehamnews.com.
MAX jets were grounded around the world last March after two crashes killed 346 people. Boeing is conducting test flights to assess updates to a flight-control system that activated before the crashes on faulty signals from sensors outside the plane, pushing the noses of the aircraft down and triggering spirals that pilots were unable to stop.
While investigators examining the MAX accidents have not pointed to production problems at the assembly plant near Seattle, Boeing has faced concerns about debris left in other finished planes including the 787 Dreamliner, which is built in South Carolina.