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Changing landscapes

the deals from a small nation of less than two million peo- ple broke records, notched a few firsts and re-priced the whole existing credit curve for its credits. The sovereign alone sold US$10bn of Eurobonds and US$5.3bn was issued by Qatari entities, including the Ras Laffan 30-year deal, the largest emerging markets FIG offering from the Commercial Bank of Qatar and the Mid- dle East’s first ever telecoms bond from Qatar Telecom. However, the picture is different in 2010. At the onset of this year, origination desks expected Middle Eastern issuance to total between US$30bn and US$35bn for 2010. With the current issuance rate, the final figure is expected to barely reach US$25bn compared with 2009’s US$40bn. Despite that, Qatari credits continue to bring well-executed top-notch deals.


For a comparison, Middle Eastern credits had printed 27 deals for US$26.31bn by mid-October 2009 compared with this year’s 26 bonds worth US$23.64bn in the same time-frame. Last year at this time, Citigroup, Goldman Sachs and BNP Paribas maintained the top three spots, and in 2010 HSBC, Barclays Capital and Deutsche Bank have emerged as the top three bookrunners. This year was largely expected to be dominated by Saudi Arabian issuers. However, the Dar al-Arkan debut US dol- lar Eurobond, which was also the first Rule 144a trans- action from the Kingdom, remains in isolation. It was the first deal from the Middle East in 2009 but failed to become a trail-blazer as many had hoped. Despite the initial hiccup at the beginning of the year, Middle Eastern issuers are on course to diversify their funding pools. This year alone the region’s credits have

lthough, bond issuance has been more evenly spread among the Gulf juris- dictions in 2010 so far, origination desks are confident that the primary market will pick up. Qatar undoubt- edly emerged as last year’s darling as

While 2009 was the year of jumbo record- breaking bond deals, this year’s total issuance is less likely to match last year’s figures. Bakyt

Azimkanov reports.

tapped the US dollar, Saudi riyal, Australian dollar, Malaysian ringgit, Emirati dirham, Qatari riyal, Singa- porean dollar and Kuwaiti dinar markets, with a euro- denominated deal in the works from the Emirates. “There is a healthy pipeline of deals coming through for the fourth quarter,” said Robert Whichello, co-head of global debt syndicate at BNP Paribas. “Issuance has been fairly light this year compared with 2009 but then we have seen swap rates drop by 100bp in just six months as well as massive spread compression,” he added, noting that “most of our clients have been right to wait until now”. By jurisdiction, in the first three-quarters of 2010,

UAE, Israel and Qatar have each issued nine, four and one international bond for US$5.65bn, US$4.74bn and US$3.50bn, respectively, followed by Bahrain, Lebanon and Saudi Arabia, which have printed three and two deals, respectively, for US$2.23bn, US$1.40bn and US$1.10bn. Jordan is expected to join the ranks of the region’s Eurobond issuers as it prepares a long awaited interna- tional debut.

There was only one international sukuk issuance from the Middle East to date: Dar al-Akran’s US$450m 11% five- year Rule144a deal. However, the void was filled by issuers in Asia-Pacific region. On the domestic front, Saudi Arabian activity picked up remarkably in 2010 com- pared with 2009, with a new regulation on housing set to open the doors for new financial products in future. “The proposed Mortgage Law has the potential to unlock significant real estate development activity in the Kingdom. The capital requirements of such activity will make products, such as RMBS, very attractive to devel- opers,” said Mohammed al-Sheikh, a managing partner at Latham & Watkins in Riyadh. In the international arena, a few credits have emerged at the forefront of issuance.

“Issuance from the GCC so far this year, with the exception of Bahrain, is significantly down from the

Middle East Report 2010| pfi| 11

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