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Gulf Debt Instruments Rise 16%

Gulf Debt Instruments Rise 16%

Tuesday, 30 January, 2018 - 13:30
National Bank of Kuwait. (Reuters)

Gulf Cooperation Council global sovereign issues reached a historic level of USD50 billion in 2017, contributing to the increase in the total value of the Gulf issues, including the public and private ones. They exceeded the USD100 billion for the second year in the row.

Revenues of debt fluctuated in a limited range until they closed the year at various levels due to tensions in the political scene and the strength of economic data.

A report issued by National Bank of Kuwait revealed that the due revenues of Gulf bonds in eight to nine years were variable. Some of them witnessed a slight change, while risks of others relapsed hugely.

Revenues were influenced by the drop in oil prices and the tension in the region. However the relative success achieved by the GCC countries in carrying out financial reforms and expanding the OPEC-led deal contributed to the hike of revenues.

Further, the re-balance of prices at the end of the year contributed to supporting the stability of these revenues. Revenues improved on Saudi bonds due in 2026, Kuwaiti bonds due in 2027 and Omani bonds due in 2027. They improved between 19 to 40 points compared to only 6 to 9 points for Qatari and Bahraini bonds.

Majority of Gulf central banks followed the example of the US Federal Reserve System in raising the interest prices up to 25 percent three times, while excluding Kuwait and Oman. These steps came in tandem with the need to maintain the currencies’ link to dollar.

For the second year in the row, the GCC total public and private issues exceeded the USD100 billion limit, led by the strength of sovereign issues. The world Gulf debt instruments covered around 50 percent of the government funding needs.

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