Middle East Bonds

It has been a dreadful August in emerging markets, but borrowers still have cash to raise and, despite the violent swings in secondary market levels, investors will have cash to put to work when the UK bank holiday has passed.

It’s been a turbulent summer in emerging markets, but borrowers in the Middle East in particular are already eyeing their return to the market.

Berlin property company ADO Properties had planned to issue its second corporate bond in recent weeks, following a successful investor update. However, a high profile bribery case in Israel has put the deal on hold for now.

Public Investment Fund, the sovereign wealth fund that invests for the government of Saudi Arabia, is seeking global bank lenders for a debut loan.

HSBC has appointed Gareth Thomas as head of global banking for the Middle East, North Africa and Turkey. He starts in the new job in September.

There is a sense that banks in the Middle East are being encouraged to pledge allegiance in the public bond markets to either Saudi Arabia and the United Arab Emirates or to Qatar, as the diplomatic tensions between the two sides rumble on. But in the MTN market it is becoming clear that no such division exists.

MUFG announced this week that it has appointed a new international head of credit sales and trading.

Frontier markets specialists Exotix Capital has made four new appointments to its EM sales business, expanding its coverage in four different geographies.

Bahraini sovereign bonds fell victim to “malicious rumours” this week after they took a further battering following headlines that Lazard had been appointed as an adviser to the country. The firm, which advises on debt restructuring among other things, was in fact appointed in early May and has been advising the country on its economy for several months, according to a source with knowledge of the matter. Virginia Furness and Michael Turner report.

Bahrain is no closer to accessing the capital markets for additional funding following its support package from its Gulf neighbours agreed last week, according to local investors. And nor is the appointment of Lazard as an advisor to the country seen as a precursor to debt restructuring.

EA Partners II, the structured high yield bonds backed by loans to several airlines which are partners of Etihad, announced a note event of default on Friday, thanks to the low bids it received for loans to Air Berlin and Alitalia, both of which collapsed last year.

The Kingdom of Bahrain’s five year CDS spread has plummeted as investors’ fears of the country’s inability to meet the repayment of its $750m November 2018 sukuk began to recede after a statement of support from Saudi Arabia, Kuwait and the United Arab Emirates. But analysts and syndicate officials are being clear that this is only the first step to Bahrain regaining access to the capital markets.