MIDEAST DEBT-Gulf rulers set to issue less in 2022, corporate bond sales increase
By Yousef Saba and Davide Barbuscia
DUBA, December 21 (Reuters) – Global debt issuance from the gulf should decrease next year, because Kings issue fewer bonds due to improved public finances, but an increase in corporate debt Sales cap decline, bankers said.
The trend will continue from this year, when sales of corporate bonds outstripped the supply of Gulf rulers, whose finances have been supported by high oil prices. According to Kuwait-based asset manager Kamco Invest, sovereign issuance fell 13.6% year-on-year in 2021, while sales of corporate debt rose 8.1%.
“If we stay at these somewhat high oil price levels, then sovereign financing needs should go down,” said one of the bankers.
Global Crude Oil Futures LCOc1 have risen nearly 40% so far this year and are currently hovering around $ 72 a barrel as the global economic recovery has fueled demand for oil.
The Saudi government, for years a major issuer of multibillion-dollar bonds, has said it will likely limit its fundraising activities to refinance maturing debt.
But companies could speed up their issuance plans in the first quarter of 2022 to make the most of abundant global liquidity before the big central banks move forward with their monetary tightening plans.
Investors in Saudi Aramco 2222.SE are likely to issue bonds in the first quarter to begin refinancing a $ 10.5 billion loan that supported the company’s oil pipeline rental and leaseback agreement, two bankers said.
Abu Dhabi Mubadala wealth fund is expected to tap the market in the first quarter, they said.
The governments of Bahrain and Oman are also likely issue bonds next year, the bankers said, with one adding that Bahrain could issue as early as the first quarter. Bahrain and Oman’s finance ministries did not respond to email requests for comment.
Aramco’s investors are a consortium led by EIG Partners, and the latter declined to comment.
Contacted by Reuters for comment, Mubadala said in a statement that he “will continue to assess the optimal time to enter the debt capital market in 2022″.
“THE RACE TO GREEN”
Green bond issuance is expected to resume in the Gulf in 2022 as governments move forward with plans to meet growing demand from investors focused on environmental, social and governance (ESG) considerations, said bankers. This year, Saudi Arabia has pledged to become carbon neutral by 2060 and the UAE has set its goal of net zero at 2050.
“It’s a race to be green. Everyone’s trying to go green this, that or the other,” said one of the bankers. The bankers asked not to be identified because the information is private.
Utico, a private utilities company in the United Arab Emirates, to issue durable sukuk, which are Islamic bonds, next year, possibly in the first quarter, a third bank source noted.
Sustainability obligations are tied to sustainable projects or deliverables.
Utico did not respond to an email request for comment.
Elsewhere in the region, Qatar has $ 2 billion in bonds maturing on Jan.20, so it could decide to go to the market to refinance them, the bankers said. Qatar’s finance ministry did not respond to an email request for comment.
By mid-December, the region’s total emissions this year had fallen to $ 145.5 billion from a record high of $ 150.4 billion in 2020, according to asset manager Kamco. noted.
(Reporting by Yousef Saba and Davide Barbuscia; Editing by Ana Nicolaci da Costa)
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