Qatar “is in talks” with banks about a sovereign sukuk issue, and is “looking to cover” a $12.8bn deficit by using a “combination of international loans and bond sales,” a new report has shown.
Qatar is seeking $10bn, and is turning to international debt markets to shore up its finances that are pressured by low energy prices, points Markaz (Kuwait Financial Centre) has said in a report.
According to Markaz, GCC (Gulf Cooperation Council) sovereigns, are looking to issue syndicated loans financed by international banks in 2016.
Bahrain launched a $600mn, two-part bond sale, offering a higher yield than it did for the previously cancelled $750mn debt sale, after the kingdom’s credit rating was downgraded to junk status by Standard & Poor’s.
S&P also downgraded Saudi Arabia, Bahrain and Oman, in its second mass cut of large oil producers in almost exactly a year, citing the pressures being created by the drop in oil prices.
Saudi Arabia was downgraded two notches to A- negative from A+ stable.
Moody’s Investors Service sharply cut Oman’s sovereign credit rating by two notches to A3, just weeks before the country would launch its first international bond issue in nearly 20 years, citing damage to state finances from low oil prices. It also kept the rating on review for a further downgrade, saying the country, a small exporter of crude, had fewer financial reserves than its rich neighbours to cope with an era of cheap oil.
On Mena (Middle East and North Africa) equity markets, Markaz said February was a good month for them, as nearly all indices ended the month in green. Dubai (8.1%) and Abu Dhabi (7.3%) indices lead the charge, while Bahrain (-0.7%) and Jordan (-1.5%) lagged behind. Kuwait’s price (1.8%) and weighted (1.4%) indices fared well, after facing one of the worst starts to a year since 2009.
Brent crude price improved marginally to close the month at $35.97 a barrel, up 3.5% from previous month’s close. Reflecting the change in fortunes, S&P GCC also improved by 3.7% in February, to close at 88 points.
Momentum trading led to investors chasing small- and mid-cap stocks in the UAE stock exchanges, as investor confidence soared over speculation that the oil price had bottomed out. Steps, such as finding consensus for production cuts, are being taken to stabilise oil price, which lifted investor sentiments, and the fact that most of the stocks were available at a discount after the January fall directed investors in droves to the markets.
Mena markets liquidity had a positive month, with volumes increasing by 17% and value traded rising by 10%. Abu Dhabi, Morocco and Bahrain witnessed increases in both volume and value traded, while Egypt, Kuwait and Jordan were the only markets to record declines in both.
Volume and value traded in Abu Dhabi increased by 172% and 59%, respectively, while the Kuwait bourse witnessed a 16% volume and 30% value drop, Markaz said.