The pick-up in activity was led by corporate conventional bond issuance, reducing the previous reliance of the market dynamic on sovereign issuers. By contrast, Sukuk issuance experienced a disappointing quarter.NCB Capital’s quarterly Debt Market Tracker reported that, continuing the upward trend seen during the first half of the year, the third quarter saw the GCC conventional debt markets gain further momentum. The number of offerings almost doubled from 14 in the second quarter to 26. The total amount issued increased by a remarkable 141 percent, from $4.5 billion last quarter to $10.8 billion during the third quarter. The market was supported by debt refinancing needs but also the greater optimism created by the Dubai World deal.“The corporate pipeline seems to be becoming more active in less stressful market conditions. In a marked departure from the relative dominance of sovereign activity during much of the past year, corporate bonds led the way in the third quarter with some of the backlog of issues now activated in more benign market conditions,” said Dr. Jarmo Kotilaine, chief economist of NCB Capital.Companies accounted for 71 percent of the total value of issues and 62 percent of the number of offerings, with financial sector companies dominating. However, the regional sukuk markets disappointed this quarter, plunging below the disappointing opening quarter of the year.While the aggregate value of sukuk issues fell sharply to $362 million, the actual number of issuances nonetheless held up with a gain from six to seven. Also the Tadawul secondary platform posted one of its slowest quarters to date, albeit partly for seasonal reasons.The performance of GCC Sukuk markets stands in marked contrast to remarkable dynamism globally. Globally, total primary Sukuk issuance continued its positive momentum, recording a 31 percent quarter-on-quarter increase in value terms. Malaysia was the most active market with an aggregate of 53 issues worth $9.2 billion in the third quarter.“The near-term outlook for the GCC debt market appears bright, bolstered by huge regional capital requirements and strengthening investor demand,” said Kotilaine.
