GCC bonds and sukuk issuance down by one-third

Total value of and sukuk issued during the first half of 2010 dropped by 32 per cent compared with the respective period of 2009, to $24.2 billion, according to a report by Kuwait Financial Centre (Markaz).

The month of April dominated in terms of issuance frequency and value, with 17 issuances and $6.1 billion, raising 25.1 per cent of H1 2010 total issuances value, the Markaz report noted.

The decline is in contrast with overall global numbers, with ratings agency S&P reckoning that worldwide sukuk issuance almost doubled in the first half of 2010.

Markaz said in its GCC report: “During H1 2010, sovereign/government issuances dominated the majority of the amount raised, with $17.2 billion or a 71 per cent of the total amount raised; this represents a continuation with the trend observed since 2003 except for the peak years of 2006-2007 and 2008, where corporate issuances dominated the market.”

Continuing with the trend witnessed since 2003, conventional issuances raised the largest amount during H1 2010 with $20.1 billion through 68 issues, which is five times the total value of sukuk issued during the same period.

Excluding sovereign/government issues, the two most active sectors during H1 2010 were the financial services sector, which raised $3.3 billion through eight issuances, and the power and utilities sector, which raked in $2.9 billion through two issuances.

The Saudi Electricity Company’s sukuk maturing in 2030 was the largest corporate issuance in H1 2010, raising a total of $1.9 billion (SAR7 billion).

Bond and sukuk issuances during H1 2010 had sizes ranging from $4 million to $1.9 billion. Issuances with a principal amount of less than or equal to $100 million were the most active with 39 issuances, while issuances with a principal value of more than $500 million and equal to or less than $1 billion raised the highest amount with $7.8 billion, or 32 per cent of the aggregate amount raised, through 12 issues.