(MENAFN - Arab Times) Kuwait Financial Centre "Markaz", in its recent research report titled GCC Bonds & Sukuk Market Survey, has highlighted the trends pertaining to aggregate issuances in the GCC region during 2011.
84.1 Billion Issued During 2011 - A 34 percent Increase from the 2010 Total Amount
The aggregate primary issuance of bonds and sukuk in the GCC totaled 84.1 billion in 2011, a 34.1 percent increase from the total amount raised in the previous year, 2010. The month of December predominated in terms of issuance frequency with 25 issuances; however, January witnessed the highest value as 17.3 billion was issued, representing 21.4 percent of the total amount issued, through 17 issuances.
GCC Central Banks Local Issuances ("CBLI") - Central Bank of Kuwait Raised 25.8 Billion - 51 percent of the Total CBLI Issuance
Central Bank Local Issuances are debt securities issued by GCC central banks to regulate the levels of domestic liquidity. A total of 50.7 billion was raised by the central banks of Kuwait, Bahrain, Qatar, and Oman during 2011, with the Central Bank of Kuwait raising the highest amount: 25.8 billion, representing 50.9 percent of the total CBLI amount through 63 issuances.
Two milestones were achieved during 2011: (i) GCC CBLI's reached a ten-year high in 2011, with 50.7 billion worth of issuances; and (ii) sukuk CBLI's have historically averaged 3.9 percent of total CBLI's, however, in 2011, sukuk CBLI's surged to 20.2 percent of the total.
GCC Bonds and Sukuk Market
The GCC bonds and sukuk market is composed of Sovereign and Corporate issuances. During 2011, a total of 33.4 billion was raised by Sovereign and Corporate bond and sukuk issuances, compared to 35.6 billion in 2009.
Sovereign vs Corporate: During 2011, corporate issuances dominated the majority of the amount raised, with 26.0 billion or 78.0 percent of the total amount raised. Sovereign issuances raised 7.3 billion representing 22.0 percent of the total amount raised.
The value and number of corporate issuances declined compared to the 2010 figures; the total amount raised by corporate issuances declined by 10.8 percent and the number of issuances declined by 5.8 percent, from 52 issuances to 49 issuances. Corporate issuances from the UAE continued to dominate the market with 33 issuances, representing 67.3 percent of the total number of issuances, raising a total of 21.1 billion, representing 81.1 percent of the total amount.
The value of sovereign issuances increased by 15.2 percent in 2011 in comparison to 2010 from 6.4 billion to 7.3 billion; however, the number of sovereign issuances decreased from 9 issuances in 2010 to 7 issuances in 2011.
Geographical Allocation: Issuances by UAE entities raised the largest amount in 2011 representing 66.5 percent of the total amount, or 22.2 billion, and were the most active in terms of issuance frequency with 35 issuances representing 62.5 percent of the total number of issuances.
Qatari entities raised the second highest amount during 2011, 5.2 billion representing 15.6 percent of the total amount. Saudi Arabian entities raised 3.6 billion, representing 10.7 percent of the total amount. Bahraini entities raised 1.7 billion, representing 5.1 percent of the total amount. Kuwaiti entities raising 0.7 billion, representing 2.1 percent of the total amount; while Oman raised the least amount with 2.8 million, representing 0.01 percent of the total amount.
Conventional vs Sukuk: Convention-al issuances represented the bulk of the GCC bonds and sukuk market during 2011, with 23.7 billion raised through 37 issues representing 71.1 percent of the total amount raised and 66.1 percent of the total number of issuances.
Both the amount and number raised by conventional issuances decreased by 18.1 percent and 27.5 percent respectively in 2011 compared to 2010. It is notable to mention that, the number of sukuk issuances almost doubled in 2011 compared to 2010, from 10 issuances to 19 issuances, raising a total of 9.7 billion.
Sector Allocation: For the first time this decade, the Oil and Gas entities accounted for the largest amount raised during the year, with 10.5 billion representing 31.5 percent of the total amount raised, through ten issuances, representing 17.9 percent of the total number of issuances. The financial services accounted for the second largest amount raised through the greatest number of bonds and sukuk issuances during 2011, with 9.8 billion representing 29.3 percent of the total amount raised through 29 issuances representing 51.8 percent of the total number of issuances.
Maturity Profile: Bonds with tenures of five-years raised the highest amount, 15.9 billion, through the largest number of issuances, 24 issuances, representing 47.5 percent and 42.9 percent of the total amounts respectively. Bonds with tenures of ten-years raised the second highest amount, 6.1 billion, representing 18.2 percent of the total amount through seven issuances.
Issue Size Profile: GCC bonds and sukuk issuances during 2011 had issue sizes ranging from 2.8 million to 2.0 billion. Bonds and sukuk with issue sizes ranging between 500 million and less than 1.0 billion were the most active with 19 issuances, representing 33.9 percent of the total number of issuances, amassing to 12.7 billion. Issuances with sizes ranging between 200 million and less than 500 million were the second most active during 2011, with a total of 13 issuances.
Currency Profile: Continuing with the trend witnessed in 2009, the GCC bond and sukuk market in 2011 was dominated by the US Dollar denominated issuances: a total of 20.2 billion was raised, representing 60.4 percent of the total amount, through a total of 29 issuances, representing 51.8 percent of the total number of issuances raised. Euro-denominated issuances followed with 5.5 billion, representing 16.4 percent of the total amount raised through four issuances (representing 7.1 percent of the total number of issuances). It is interesting to note that International Petroleum Investment Company's GBP550.0 million is the first issuance to be denominated in Pound Sterling in the GCC since February 2007.
Rating: During 2011, a total of 37 issuances, or 66.1 percent of the total Sovereign and Corporate issuances, were rated by either one or more of the following rating agencies: Moody's, Standard & Poor's, Fitch, RAM, Capital Intelligence, and Capital Standards.
Listing: During 2011, 39 bonds and sukuk, representing 69.6 percent of all the bonds and sukuk issued and a total of 29.4 billion, were listed on both regional and international exchanges. A total of 32 bonds were listed on international exchanges with a total value of 25.5 billion versus; two bonds/sukuk were listed on both an international exchange and a regional exchange, representing 1.5 billion; and five bonds/sukuk were listed on regional exchanges with a total value of 2.3 billion.
Bonds and Sukuk Total Amount Outstanding in the GCC
As at Dec 31, 2011, the total amount outstanding of corporate and sovereign bonds issued by GCC entities was 181.9 billion. Corporate issuances make up the majority of the total amount outstanding with 120.3 billion, or 66.1 percent of the total amount. Sovereign issuances amount to 61.9 billion or 33.9 percent of the total amount.
Of the amount outstanding as at Dec 31, 2011, 112.3 billion, or 61.7 percent, will mature over the course of the next five years, by the end of 2016.