Middle East Bonds

DP World has become the third Middle Eastern borrower to launch a sustainable finance framework — a preparatory move ahead of a debut green bond. More issuers from the Middle East are expected to follow suit.

Abu Dhabi printed a huge $10bn bond on Monday with no roadshow and a 30 year tranche that was 20bp tighter in spread than its last bond of the same maturity printed in 2017. But though the deal seems to have been triumphant for Abu Dhabi, the notes were around 2bp wider on Wednesday and investors are fretting that large EM supply is causing some indigestion in the market.

Bankers brought a flood of Middle East bond supply to market on Tuesday, with four separate issuers — the Kingdom of Bahrain, DP World, National Bank of Fujairah and Islamic Development Bank — all announcing guidance for deals. The notes follow an already heavy week of supply from the Gulf, with Abu Dhabi having printed a $10bn triple trancher on the same day.

The Emirate of Abu Dhabi ended a two year absence from capital markets on Monday with a triple trancher, mirroring the tenors it used in its last trip to the market in 2017.

DP World, the company responsible for operating Dubai’s ports, is buying back two of its outstanding bonds, becoming the fifth EM borrower to do so in September.

Saudi Aramco, the state-owned oil company of Saudi Arabia, is confident that its exceptional financial position will allow its IPO to withstand geopolitical shocks such as the drone attack on the company’s oil facilities last Saturday, write Sam Kerr, Mariam Meskin and Francesca Young.

Last weekend’s attack on Saudi oil facilities drove up the oil price and caused a rush to safe haven assets, but investors say they expect the turbulence to be short-lived.

Four Middle Eastern borrowers are set to come to market next week, as issuers and investors alike shake off the volatility caused by the attack on Saudi oil facilities last weekend.

Gulf borrowers are being increasingly lured by the attractive terms offered in bond and sukuk markets, much to the detriment of international lenders, many of which are disgruntled by the disappointing loan volumes in the region.

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Emaar Properties showed there is a strong appetite for sukuk paper with its trade this week, joined in the market by Bank of Sharjah, which was able to raise $600m, setting the stage for a third Middle East issuer to tap the market next week.

Multilateral development bank Arab Petroleum Investments Corp (Apicorp) is eyeing up the bond market for a potential benchmark issue, while a green euro bond may also be on the cards for the Saudi-headquartered bank, according to Sherif Ayoub, chief financial officer.