Middle East

Emerging markets were treated to their first week of supply from the Gulf region in four months, and despite the sudden glut of supply, performances were strong and the market is ready for more.

It is the 10th anniversary of Lehman’s collapse and we are being inundated with retrospectives and predictions of what will cause the next crisis. Many are pointing towards emerging markets as a likely catalyst, a logical conjecture given the tightening in monetary policy that is underway in the US.

The Central Bank of Turkey delivered a larger-than-expected interest rate hike this week that was given a cautious welcome by emerging markets bond syndicate bankers hoping to see some stability in the lira. Loans bankers working on a crucial $930m loan refinancing for Akbank — seen as a litmus test of foreign lenders' appetite to roll over loans to the financial sector — were nonplussed by the move, but still expressed confidence in rolling the bulk of the funds.

The Turkish central bank, in a remarkable display of independence, has raised its weekly repo rate by 625bp, combatting its runaway inflation but making recession a more likely prospect, according to one investor.

The Saudi Electricity Company (SEC) has joined the groaning pipeline of issuers looking to print dollar sukuk paper, picking banks for what will be the borrower’s first trip to the bond market in four years.

Saudi Arabia has come to market for a long 10 year dollar sukuk bond, targeting $2bn, returning for a trade after five month’s absence from the bond market.

Al Hilal Bank (AHB) and Abu Dhabi Islamic Bank (ADIB) are on screens on Wednesday with dollar sukuk benchmarks — the first in a wave of Middle Eastern supply.

Akbank has been defiant in the face of claims from pockets of the loan market that its latest deal will not gain enough traction to fully refinance the loan it is replacing, claiming that a 100% rollover is still a possibility.

Investors’ eyes are on the Middle East this week as a slew of borrowers bring Sukuk trades to market, but while hopes are high for successful deals, a Turkish central bank rate decision looms large in investors’ minds.

Islamic Development Bank is preparing a return to the sukuk market, picking banks for a roadshow for a dollar benchmark.

Abu Dhabi Islamic Bank (ADIB) and Al Hilal Bank (AHB) have completed their roadshows, and are set to reopen the dollar sukuk market on Wednesday.

Most rated Turkish corporates can handle their refinancing needs over the next 12-18 months, according to Moody’s. This is despite anecdotal evidence from bankers about deteriorating loan metrics in the country.