Fixed income issues in the Gulf Cooperation Council (GCC) countries jumped in 2017 to highest level, along with the increase of the bonds and assets’ markets issues.
This year is considered a record-year for GCC because of the continuous relative relapse of oil prices accompanied with the rise of local budgets pressures and the spending on infrastructure, leading to increased issues in the region.
Current approaches show that there is a series of issues underway on the short term. Further, raising the interest rate in the US and the pressure resulting from the attempt to keep Gulf currencies pegged to the American dollar lead central banks in the region to raise the interest rate.
KAMCO Investment Company K.S.C.P., Research Division, affirmed that Saudi Arabia continued to have the lion’s stake from total fixed income issues, meaning USD40.6 billion compared to USD20 billion in 2016.
Bonds’ issues grew USD28.1 billion last year, compared to USD1.7 billion in 2016. Assets’ issues reached USD12.5 billion in 2017 compared to USD18 billion in 2016.
On the economic level, KAMCO revealed that projects’ market in the GCC is among the biggest markets with a value of around USD3.1 trillion. Compared to last year’s levels, this figure is 11.6 percent (USD300 billion) more than 2016.
As for the credit condition of issuing parties, most oil-producing states in the MENA enjoy an acceptable credit rating, allowing them to increase debt levels in the international market.
This typically applies to the GCC countries since their economies maintain investment credit ratings even though rating agencies have downgraded some of them when oil prices dropped.