Investors in fixed income are eagerly awaiting tomorrow's monthly auction of Saudi government sukuk, amid trading of US 10-year Treasury bond yields below 4.20% in mid-August, down from above 4% in early March. The Saudi sovereign issuance entity retains the option to proceed with the offering or not.
The value of debt raised by Gulf issuance entities reached $46.9 billion in the first half of 2023, marking a year-on-year increase of around 139%, according to "Al-Eqtisadiah" newspaper.
This increase is attributed to the volume of delayed issuances from 2022 and favorable issuance windows in the first quarter of this year.
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Saudi entities dominated dollar bond and sukuk issuances in the Gulf during the first half, accounting for 69.5% of the region's total issuances, according to data from the First Abu Dhabi Bank's Fixed Income Instruments Management.
External borrowing has allowed the local financial sector to support the growth of riyal-denominated credit for local companies.
It is worth mentioning that some Gulf issuance entities have preferred to avoid the market due to the high interest rate environment.
Observers expect Gulf dollar issuances, for the remainder of this year, to recover from their slowdown in the second quarter, by issuing new bonds to refinance other financial obligations.
This comes after monitoring revealed that the total Gulf issuances in the second quarter amounted to $18.3 billion, a 36% decrease compared to the total issuances in the first quarter.
The reason for this decline is attributed to the rise in bond and sukuk pricing in the second quarter, which led to increased funding costs and the postponement of some issuances.
It is noteworthy that the total issuances in the first half significantly deviate from the amount raised, which was $78.1 billion, in the first half of 2021 during the low-interest-rate era.
