Gulf bonds likely to set record in 2021 amid budget squeeze

Gulf bonds likely to set record in 2021 amid budget squeeze
Kuwait could return to the bond market, depending on a new debt law that would allow it to raise more funds overseas and help it to overcome a liquidity crunch. (Shutterstock)
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Updated 27 November 2020

Gulf bonds likely to set record in 2021 amid budget squeeze

Gulf bonds likely to set record in 2021 amid budget squeeze
  • International debt sales from GCC rise as governments fill deficits and corporates hunt cheap money amid low rates

DUBAI: International debt sales from the six-member Gulf Cooperation Council are likely to notch another record year in 2021 as governments need to fill wider deficits and corporates look to grab money on the cheap amid low rates.

The oil-rich region saw a second consecutive year of record international bonds, topping $100 billion, as issuers’ finances were battered by the COVID-19 pandemic along with low oil prices, with a few issues still possible before year-end.

“I think overall, the market will grow. We can easily add $7-10 billion more to 2020 total issuance,” said Khalid Rashid, head of debt capital markets for the Middle East and North Africa at Deutsche Bank.

S&P Global Ratings said in July that GCC government balance sheets are expected to continue to deteriorate up until 2023.

Kuwait, which has not issued dollar bonds since 2017, could return to the market next year, depending on a new debt law that would allow it to raise more funds overseas and help it overcome a liquidity crunch.

James Reeve, chief economist at Samba Financial Group, estimated Saudi Arabia’s financing requirements at about $60 billion next year, of which about $18 billion would be covered via eurobonds.

More issuance is expected from Dubai, which in September returned to the public debt markets for the first time in six years. Bankers expect it to issue another $2 billion next year as key sectors of its economy continue to be squeezed.

For sub-investment grade Bahrain and Oman, issuing debt is vital to replenish dwindling foreign reserves, though Oman may need explicit support from Gulf neighbors as investors are increasingly concerned about its worsening credit trajectory.

Hasnain Malik, head of equity strategy at Tellimer, said that he expects more consolidation among government-related enterprises, removing duplicated cost, and “raising of debt for the stronger business models that result from this consolidation is likely.”

Among corporates, a new entry could be Abu Dhabi National Oil Company (ADNOC), which received a credit rating last year, a banker said. ADNOC did not respond to a request for comment.


Remittances from Egyptians abroad hit an all-time high despite the pandemic

Remittances from Egyptians abroad hit an all-time high despite the pandemic
Updated 20 sec ago

Remittances from Egyptians abroad hit an all-time high despite the pandemic

Remittances from Egyptians abroad hit an all-time high despite the pandemic

The Central Bank of Egypt announced that remittances from Egyptians abroad rose to their highest ever annual level last year even as the pandemic weighed on economic activities worldwide.

The bank’s data revealed that money from Egyptians working abroad during the fiscal year 2020-2021 saw a 13.2 percent rise — or about $3.7 billion — compared to the 2019-2020.

The Central Bank of Egypt added that the payments amounted to about $31.4 billion, compared to about $27.8 billion dollars in the previous 12 months.

During June, money from Egyptians abroad also witnessed an annual increase of 15.5 percent, about $2.9 billion, compared to about $2.6 billion in June 2020.

Minister of Planning and Economic Development Hala Al-Saeed said one of the objectives of his government's economic development plan include increasing money from Egyptians working abroad to about $30 billion, compared to $25.2 billion in 2018-2019, according to data issued by the Ministry of Planning.


New Saudi committee tasked to regulate foreign investments as Kingdom opens up

New Saudi committee tasked to regulate foreign investments as Kingdom opens up
Updated 8 min 7 sec ago

New Saudi committee tasked to regulate foreign investments as Kingdom opens up

New Saudi committee tasked to regulate foreign investments as Kingdom opens up
  • Chaired by the investment minister, the new committee will also set the limit for foreign ownership in local companies

RIYADH: Saudi Arabia has formed a new committee to regulate foreign investments and protect the Kingdom's critical sectors such as utilities.

The committee is tasked to create and implement a criterion for foreign investors, identifying a list of companies, individuals, and activities excluded from foreign investment, Argaam reported, citing a cabinet's decision.

Chaired by the investment minister, the new committee will also set the limit for foreign ownership in local companies.

“The setup of this committee is a sagacious decision which reflects the fast pace of change in the economic structure with the participation from foreign investors,” Mohammed Al-Suwayed, chief of Razeen Capital, said.

The committee comes as more foreign entities take an interest in entering the Saudi market as part of the government’s push to modernize its economy.

Saudi analyst Al-Suwayed said: “The committee is made to deal with the implications of national security and national resources including natural and critical types of resources.”

He said the decision to create the committee will protect the Kingdom from “broader political risk” if critical services such as utilities are controlled by foreign businessmen.

“Businessmen in Saudi have more access to public policymaking than any other stakeholders, and after allowing foreign businessmen to join the boards of Commercial Chambers, they're expecting to enjoy the same access and influence policymaking as well,” he explained.

Ministers of commerce, economy, planning, communications and information technology, heads of the Local Content Authority and the Capital Market Authority will also be part of the committee. 


Wind power systems project to contribute 15% to Al Yamamah Steel’s revenue, its president says

Wind power systems project to contribute 15% to Al Yamamah Steel’s revenue, its president says
Updated 14 min 30 sec ago

Wind power systems project to contribute 15% to Al Yamamah Steel’s revenue, its president says

Wind power systems project to contribute 15% to Al Yamamah Steel’s revenue, its president says
  • he project was announced last February, with an investment of around SR300 million, and is expected to be completed by the second quarter of 2023

The new wind energy systems project of Al Yamamah Steel is expected to generate 15 percent of its total revenue, the company’s president Youssef Bazaid said.

The project was announced last February, with an investment of around SR300 million, and is expected to be completed by the second quarter of 2023.

It is part of the company’s renewable energy transition, following the creation of a solar energy system in 2019, Bazaid told Al-Arabiya in an interview.

The new project will have a capacity of 520 megawatts (MW) per year, which only covers 35 percent of its 1600 (MW) target in the coming years.

It will only initially serve domestic demand, Bazaid said.


Institutional part of ACWA Power IPO oversubscribed within minutes

Institutional part of ACWA Power IPO oversubscribed within minutes
Updated 17 min 37 sec ago

Institutional part of ACWA Power IPO oversubscribed within minutes

Institutional part of ACWA Power IPO oversubscribed within minutes
  • Less than 10 minutes into the offering, which will end on Sept. 27, requests from private institutions exceeded some 81.2 million shares

The public offering of Saudi Arabia’s ACWA Power drew strong demand from local and international institutional investors  just minutes after the bidding started, CNBC reported, citing banking sources.

Less than 10 minutes into the offering, which will end on Sept. 27, requests from private institutions exceeded some 81.2 million shares, the source added

The Saudi utility company earlier announced the price range for the offering, as it aims to raise $1.2 billion.

Half-owned by the Kingdom’s Public Investment Fund, the company is selling 81.2 million shares in a range of SR51-SR56 per share or an 11.1 percent stake.

The listing will value ACWA at up to $11 billion – making it the biggest offering in Riyadh since Saudi Aramco’s listing.

Its chairman, Mohammed Abunayyan, earlier said investors, including Americans and Europeans, expressed strong interest in investing ACWA Power.


IPO will cement ‘solutions by stc’ position as region’s top digital enabler: CEO

IPO will cement ‘solutions by stc’ position as region’s top digital enabler: CEO
Updated 21 min 38 sec ago

IPO will cement ‘solutions by stc’ position as region’s top digital enabler: CEO

IPO will cement ‘solutions by stc’ position as region’s top digital enabler: CEO
  • Solutions by STC recently announced it will go public, offering 20 percent of the company’s shares

DUBAI: The planned initial public offering of Saudi Arabia’s Solutions by STC will cement the company’s position as a top digital enabler in the region, its Chief Executive Officer Omar Al-Noamani said.

A unit of the Saudi Telecom Company, Solutions by STC recently announced it will go public, offering 20 percent of the company’s shares.

The move is expected to increase the company’s capital, Al-Noamani said in an interview with CNBC Arabia, and to explore expansion opportunities in other markets.

“We are in a very good financial standing,” the CEO said, noting the 31 percent increase of the company’s cumulative average of net revenue in the last three years.

Net profit also increased by 13 percent in the same period, he added.

He said this strong financial solvency will allow the company to distribute IPO proceeds directly as divided to shareholders.

The dividend policy, which is yet to be announced, will depend on performance evaluation and growth rates, Al-Noamani said.