JPMorgan Sees Gulf Bond Sales Slipping as Rates, Volatility Rise - Bloomberg

JPMorgan Sees Gulf Bond Sales Slipping as Rates, Volatility Rise - Bloomberg:

JPMorgan Chase & Co., one of the biggest arrangers of Gulf bond deals, expects sales to slip in 2019 from last year’s $78 billion as issuers turn cautious amid rising interest rates and market volatility.

In the past, when there has been uncertainty either “in rates or in spreads, regional issuers tended to become more careful and price sensitive,” Hani Deaibes, the U.S. bank’s regional head of debt capital markets, said in a phone interview from Dubai. “Most of our clients have multiple funding options and will consider other alternatives” if bonds turn too expensive, he said.

Borrowers from the six-nation Gulf Cooperation Council, which include the two biggest Arab economies of Saudi Arabia and the United Arab Emirates, primarily sell bonds in dollars and two further interest rate hikes forecast in the U.S. this year will add to costs. The possibility of economic growth stalling in the U.S. and China, the trade dispute between the world’s two biggest economies, political turmoil in Europe and falling oil prices are all contributing to volatility in financial markets that will make potential issuers uncomfortable.