(MENAFN- Gulf Times) Standard & Poor's Ratings Services projects that some 13 Middle East and Northern African (Mena) sovereigns that it rates will borrow an equivalent of $134bn from long-term commercial sources in 2016.
This compares with borrowing of $143bn in 2015, which was more than double the $68bn S&P expected would be borrowed in that year.
However, S&P noted that its updated estimate for 2015 included an additional $30bn in borrowing by Iraq. S&P has included Iraq in the survey for the first time, having assigned it sovereign credit ratings in September 2015.
Due to lack of clarity with regard to the debt management policies of some Gulf Cooperation Council (GCC) countries, S&P had made the assumption that emerging fiscal deficits would be wholly financed by drawing down on assets.
However, in the case of Saudi Arabia, although the sovereign did liquidate some assets, S&P estimates that the government also borrowed $26bn equivalent in 2015.
"All in all, we estimate GCC countries' borrowing at $40bn in 2015 rather than the $5bn we projected in March 2015," S&P said.
S&P believes a 9% decrease in long-term commercial debt issuance in 2016 compared with 2015 will largely result from a decline in borrowing by the Egyptian government, due to what it expects will be "modest fiscal consolidation".
About 40%, or $53bn, of the sovereigns' gross borrowing will be to refinance maturing long-term debt, compared with $61bn in 2015, resulting in an estimated net borrowing requirement of $81bn.
Consequently, S&P projects that the commercial debt stock of the Mena sovereigns it rates will reach an equivalent of $667bn by the end of 2016, up by $85bn, or 15%, from 2015.
Adding in bilateral and multilateral debt, the total stock will reach $814bn, a year-on-year increase of $116bn, or 17%. The share of non-commercial official debt (bilateral and multilateral) in total sovereign debt is set to rise to 22% of total debt as of year-end 2016, from 20% in 2015.
"We expect that outstanding short-term commercial debt will reach $163bn at year-end 2016," S&P said.
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