Smaller Gulf banks, squeezed by difficult funding conditions and flush with bond paper following the busiest period of issuance from the region on record, are increasingly exploiting the repo market to raise capital.
The banks are using repurchase agreements — contracts in which a security, such as a bond certificate, is temporarily transferred to another holder during a set period in exchange for capital — to manage liquidity as other sources of funding dry up.
Bond issuance out of the Gulf Cooperation Council has totalled $91.5 billion (Dh336.046 billion) in the last three years, according to Thomson Reuters data, with much of the paper being issued by highly rated, state-linked entities.
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