Gulf governments will rely less on bond markets this year - The National

Gulf governments will rely less on bond markets this year - The National:

Governments in the Gulf region will continue to tap debt capital markets this year, but their external financing needs are likely to be lower, according to the regional head of research and strategy at Japanese bank MUFG.

Sovereign issuance by Gulf governments is expected to reach around $31.9bn (Dh117.1bn) in funding to bridge budget deficits as they look to take advantage of a pause in interest rate hikes and the low cost of debt globally, said Ehsan Khoman, head of Middle East and North Africa research and strategy at MUFG. However, this is likely to be significantly lower than the amount issued last year.

Although MUFG did not give a comparative figure, a paper published by Kuwait Asset Management Company this month stated sovereign bond issuance from GCC countries increased 29 per cent last year, to $48.8bn. A further $29.8bn was also issued in sukuk, up 12 per cent on 2018.

Cumulative gross financing needs of the Gulf states will narrow in 2020 on the back of stability in oil prices at relatively higher levels and more prudent expenditure policies of regional governments, Mr Khoman said.