Bloomberg News

Middle East 2012 Bond Sales to Surpass 2011, Morgan Stanley Says

January 16, 2012

Jan. 15 (Bloomberg) -- Middle East and North Africa foreign bond sales will this year surpass last year’s $27.6 billion as borrowers need to pay loans and will increasingly choose bonds, Morgan Stanley & Co. said.

“The bulk will be government and government-related debt issuance” and financial institutions will continue to be “active,” Klaus Froehlich, managing director for capital markets for the Middle East and North Africa told reporters in Dubai today. Offers of Islamic bonds or sukuk will also rise as there is “enormous appetite” for the debt, he said.

International bond sales from the Middle East and North Africa fell 17 percent in 2011 from $33.1 billion in the previous year, according to Morgan Stanley, as political unrest sweeping parts of the region and Europes’s sovereign debt crisis forced some issuers to postpone sales. The Qatar government’s $5 billion sale in a three-part issue in November was the single biggest issue from the region in 2011.

Borrowers in the Middle East and North Africa have raised $1.3 billion from three issues this year, all of them sales of sukuk by financial institutions, according to data compiled by Bloomberg. Tamweel PJSC, a United Arab Emirates mortgage company, raised $300 million from five-year Islamic bond Jan. 12, while Emirates Islamic Bank PJSC, a Dubai-based bank, sold $500 million in five-year Islamic bonds Jan. 10.

Bonds contributed 41 percent of debt raised in the region last year from 16 percent in 2007, according to Morgan Stanley.

The region’s market for initial public share offerings may recover “as there are some high quality issuers preparing” to access the market, Froehlich said. A “high single digit” number of companies plan to sell shares in IPOs or to increase capital that will be marketed internationally, he said. Each of these issues will raise at least $250 million.

--Editors: Claudia Maedler, Inal Ersan

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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