Flurry of Gulf bonds risks ‘indigestion’

After a rocky half-year, the Gulf’s regional bond market is showing signs that it is beginning to thaw with a flurry of government and government-linked company debt issuance in recent weeks.

The aggregate spread of Gulf Islamic and conventional bonds over US Treasuries has narrowed from 825 basis points at the peak on February 12 to under 500 basis points, according to an index compiled by HSBC and Nasdaq Dubai.

But bankers warn that the nascent demand for Gulf debt could be strained by a deluge of bond issuance.