Middle East Bonds

Dominance in one of its operational markets enabled Topaz Marine to raise $375m of five year money on Wednesday despite coming from what the leads acknowledge to be a ‘tough sector.’

Topaz Marine was marketing the first Gulf Co-operation Council-domiciled (GCC) credit since May on Wednesday morning, but the credit is no barometer for appetite Gulf names in the wake of the Qatar crisis, said investors.

With a few weeks to go before asset managers begin their annual pilgrimage to the globe's beachfronts, the last few borrowers are slipping into the primary market before liquidity evaporates in the summer heat. Nostrum’s trade this week provided evidence of the slowdown in demand for risker credits.

‘Business as usual’ was the tone this week in emerging markets, after last week’s losses were reversed and mandates began trickling through from across CEEMEA.

Topaz Marine, an oil field support services provider based in Dubai, is meeting investors for what will be the first bond from a Gulf Co-operation Council domiciled issuer since the beginning of the Qatar crisis.

CEEMEA primary issuance will be clustered around the last few days of the week as Liquid Telecom is yet to announce price guidance on its $600m five non-call three year trade.

Foreign ministers from across the Gulf meet in Cairo on Wednesday to discuss the continued tensions with Qatar, as bank analysts predicted the Saudi Arabia-led coalition against Qatar will reject the country’s response to its demands.

Diplomatic tension in the Gulf between Qatar and Saudi Arabia and others has rattled the financial markets. But as the political trouble escalates, what that spells for the region’s capital markets is far from clear, write Bianca Boorer, Virgina Furness and Sharon Kimathi.

GCC debt markets are experiencing their first big wobble since gaining prominence as the most prolific issuers in CEEMEA, and no one saw it coming. The recent Qatar-related sell-off is both a stark reminder that EM assets are not a one-way bet, and highlights the vulnerabilities of a debt market fuelled largely by local bank demand.

Qatari dollar bonds sold off by as much as five cash points on Tuesday after the central banks of United Arab Emirates, Bahrain and Saudi Arabia demanded banks to provide details of their exposure to Qatar. The move follows countries in the region severing ties with the gas-rich state, accusing it of supporting terrorism.

Qatar’s debt sold off sharply on Monday after Saudi Arabia, the UAE, Bahrain and Egypt severed diplomatic relations, as well as all land and sea contacts, with the gas-rich state. Bankers recall a similar “flare up” in 2014, but are concerned about stability in the region’s financial markets.

Ratings agency Moody’s opined on the Middle East after market close on Friday, with the United Arab Emirates seeing a better outlook while Qatar’s creditworthiness took a hit. Qatar’s rating was cut from Aa2 to Aa3 with a stable outlook on the back of a weakening in the sovereign’s external debt to GDP levels and uncertainty around where growth will come from in the medium term.