Dubai: The GCC bond market has more potential to the upside as it is driven by a supportive macroeconomic outlook, ample liquidity and a strong local investor base according to Christiane Nasr, Head of Mena Fixed Income & Director at the Dubai office, Crédit Agricole Private Banking.
The GCC bond market posted an impressive performance last year in comparison to its peers in other Emerging Markets. Regional bonds in the high yield category led by Dubai Inc have returned more than 7 per cent in 2013 outperforming other Emerging Markets which were in negative territory for the first time since 2008. Year-to-date, GCC corporates have returned more than 2 per cent, which is twice better than emerging markets counterparts.
Sound liquidity
“The credit profiles of regional corporates are improving with stronger fundamentals as reflected in their sound liquidity and their lowest level of leverage since 2009,” said Nasr
This positive momentum is leading to rating upgrades across the region. Earlier this year, Emaar Properties gained an “investment grade” status for the first time since 2009.
Nasr sees strong issuance pipeline in the region this year. “More than $18 billion (Dh66 billion) worth of regional bonds are maturing this year and we can expect these companies to come back to the primary market to refinance their debt,” she said.