GCC bonds monitor April 2019

GCC bonds are generally performing in sync with the wider financial markets.

GCC primary market was healthy with total new issuance in dollar denominated fixed rate bonds exceeding the USD 31 billion mark. Sukuk issues lagged steam with only $5 billion of new issues in Q1.
Oil prices stabilizing sustainably above the USD 60 / pb mark are providing a constructive backdrop for GCC bonds.
Oman was downgraded by Moody’s from Baa3 to Ba1/negative, placing it firmly in the high yield category.
Technical bid from inclusion in the JP Morgan EMBI index continued to support GCC Bonds with average credit spread on Bloomberg Barclays GCC index tightening by 36bps from 212 bps to 176bps.
Sector diversification is on the path to improve with emergence of Al Marai and Aramco in the market.
Bond tenures continued to increase as KSA priced the first 2050 maturity bond in the region in January this year.
First issuance under the new debt law in the UAE was done by the Emirates Development Bank that priced a $750 million Reg S transaction and intends to become a regular issuer in hard as well as local currency denominated issues.