After two months of inactivity due to the euro zone debt crisis and turmoil in global financial markets, high-grade borrowers from the Gulf Arab region may be close to resuming issuance.
There is a substantial number of bonds in the pipeline, and a partial improvement of sentiment in global markets in the past week -- although the euro zone crisis remains fundamentally unresolved -- has helped Gulf spreads tighten dramatically.
The average yield on the HSBC Nasdaq Dubai GCC conventional dollar bond index fell to 5.039 percent on Wednesday from 5.245 percent at the end of last week. Average spreads, calculated over Libor, narrowed to 305.6 basis points from 345.6 bps. In the week to Oct. 5, net outflows from emerging market bond funds slowed to $1.4 billion from the previous week's $3.2 billion, according to IFR Markets.
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