Middle East Bonds

The African Development Bank (AfDB) has signed a memorandum of understanding (MoU) with the Islamic Liquidity Management Corporation (IILM) in a bid to broaden its funding base.

Wednesday’s confirmation by the chairman of the US Federal Reserve, Ben Bernanke, of his intention to begin reducing quantitative easing this year if economic conditions allow have all but killed off any remaining prospects of international dollar sukuk issuance before Ramadan, say Gulf-based investors. But it could also lead to the return of shorter-dated floating rate sukuk at the expense of long-tenor fixed rate instruments, writes Dan Alderson.

Another surge of volatility shattered emerging market bond bankers’ hopes for a round of fresh supply this week. But as rising US Treasury rates throw the market into turmoil, syndicate officials are staying stoic. Investor appetite for the right names is still strong, and some stability next week is all issuers need to bring benchmarks, they said.

Wednesday’s confirmation by the chairman of the US Federal Reserve, Ben Bernanke, of his intention to begin reducing quantitative easing this year if economic conditions allow have all but killed off any remaining prospects of international dollar sukuk issuance before Ramadan, say Gulf-based investors. But it could also lead to the return of shorter-dated floating rate sukuk at the expense of long-tenor fixed rate instruments, writes Dan Alderson.

Israel Electric braved an uncertain market to launch a dual tranche dollar deal this week, but it managed to print a solid trade on Tuesday afternoon in spite of market uncertainty ahead of the US Federal Open Market Committee meeting on Wednesday.

Emerging market bond bankers hope Wednesday's US Federal Open Market Committee meeting will calm the market and offer issuers a window. Israel Electric has already proved successful deals can get done, and there are plenty of borrowers waiting for their chance.

The Central Bank of Bahrain sold BD20m ($53.2m) of short-term sukuk al ijara in its monthly sale, which was oversubscribed by 35%.

The international sukuk market remains open for business despite a lull in new issuance and the big recent sell off in emerging market bonds, say investors.

Israel Electric broke the silence in the CEEMEA corporate bond market on Tuesday, opening books on a dual tranche dollar deal. Other issuers remain sidelined until the US Federal Open Market Committee meeting ends on Wednesday, but there are strong arguments for coming sooner rather than later, bankers say.

Political protests in Turkey should hold no fear for supporters of Islamic finance in the country. The hard work has been done and the product looks set for a big future.

Bahrain began a roadshow this week to gauge demand for a conventional dollar deal. Analysts expect its borrowing needs to rise sharply in order to stem a growing fiscal deficit, but this worrying trend could also turn some investors away.

State-owned Israel Electric began a roadshow on Tuesday ahead of a 144A dollar deal. The utility, one of most long-standing borrowers in the CEEMEA region, is updating investors on positive developments in the energy sector, said bankers.