Middle East Bonds Rise, Become Safe Haven in Global Slowdown: Arab Credit - Bloomberg

Middle Eastern sovereign bonds are rallying for a second month as economic growth and cash-rich banks lure investors seeking shelter from Europe’s debt crisis and the U.S. economic slowdown.

Schroder Investment Management Ltd., Abu Dhabi Commercial Bank PJSC and Fideuram Asset Management Ireland Ltd. predict the rise, fueled by Persian Gulf borrowers and Lebanon, may continue. The average yield on the region’s notes fell 15 basis points, or 0.15 percentage point, this month to 4.69 percent, the lowest since November, the HSBC/Nasdaq Dubai Middle East Conventional Sovereign US Dollar Bond Index showes. Rates on emerging-market government debt rose six basis points to 5.73 percent Aug. 16, data compiled by JPMorgan Chase & Co. show.

Persian Gulf countries “do not represent any sovereign risk given the massive surpluses they have accumulated in the past 5 years as a result of high oil prices,” Rami Sidani, the Dubai-based head of Middle East and North Africa investments at Schroder, which oversees about $230 billion worldwide, said in an e-mail on Aug. 16. “We don’t expect yields to pick up before we see a general pick up in risk appetite.”

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