US bank: Gulf countries do not need to issue huge bonds

 The US bank "JP Morgan" revealed that reducing deficits and improving liquidity and financial revenues of the Gulf countries reduced their urgent need to issue "huge" bonds with a value of more than 5 billion dollars, expecting that countries in the region will continue to issue debt bonds this year.

And according to what the Kuwaiti newspaper “Al-Qabas” reported, on Thursday, Hani Daibes, Head of Capital Debt Markets for the Middle East and North Africa at JPMorgan, said that Kuwait may be the only Gulf country that may decide to conduct a huge bond deal (in the event that the government obtains The National Assembly’s approval of the debt law) after its absence from the bond issuance market since 2017, when it issued debt bonds worth $8 billion.

He added that Saudi Arabia has gradually reduced its financing requirements, Abu Dhabi's financial position is very good, and Qatar has covered the bulk of its large capital expenditures.

He stated that, in 2016, Saudi Arabia issued bonds worth 17.5 billion dollars, which marked the beginning of a new era of jumbo bond issuance in the region, as the Kingdom and the countries of the region urgently needed to finance their financial deficits after the collapse of oil prices in 2014 and 2015.

Daibes pointed out that other Gulf countries continued to issue huge bonds, as Qatar Petroleum this year issued bonds worth 12.5 billion dollars.

And he indicated that, with the exception of unexpected shocks such as the “Corona” shock, it is expected that Gulf governments in the future will cover their financing needs through bond issues, but in smaller sizes than before.

He stressed that the region's governments are trying to market bond issues this year to improve their pricing, but with low financing needs, these governments will not be forced to make huge issues.

He added, "We are now in the period of refinancing the large deals that took place in 2016 and 2017, so the volume of issuances must be maintained through refinancing and issuances from new entities as the market continues to develop, regardless of the decrease in the fiscal deficit at least in the next few years."

And economic sources told Reuters, earlier, that the recovery in oil prices this year reduced the thirst of Gulf governments for debt bonds, but some of them may continue to exploit the markets to take advantage of low interest rates.