Middle East

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.

It isn't often that equity investors are asked to buy assets subjected to physical attack. The drone strikes on Saudi Arabia’s Abqaiq and Khurais oil facilities on Saturday could lead to Aramco demanding a big discount on any upcoming listing. The IPO market has suffered its fair share of geopolitical tumult of late, but this long and keenly anticipated deal could wind up being the riskiest of them all.

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.

Sources close to the listing of Saudi Aramco, the state-owned oil producer, have confirmed that they are working flat out to bring the Saudi company to market before the end of the year, despite attacks on its oil fields over the weekend.

Rating: Baa3/BBB-

The Turkish central bank delivered a 325bp cut to its main policy rate on Thursday. Although the move is larger than the 250bp consensus that had emerged ahead of the meeting, many analysts had been fearful that the move would be even more drastic — and the market appears to be rallying in relief.

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.

Ratings, huh. What are they good for? Absolutely nothing — at least not when push comes to shove in the financing of Turkey's banks. Moody's downgrade to the Turkish sovereign and the country's banks in June sparked concern among syndicated lenders. But as another round of refinancings begins, pricing is tightening and banks are heaping praise upon their Turkish counterparts.

Kuwait's Warba Bank is embarking on a roadshow to market its first senior unsecured sukuk. The dollar five year note is expected to be printed “around the 3% mark”, according to a DCM banker on the deal.

The order book for Emaar Properties’ 10 year sukuk had hit around $1.85bn by Tuesday morning, but the issue size will be capped at $500m, according to a DCM banker on the deal.