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28 March 2024

GCC bonds and sukuk issuance down by one-third

Kuwait Financial Centre (AFP)

Published
By Staff

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.