Business | Investment
Debt and equity issues expected to thrive simultaneously in Gulf
Corporate debt issues and equity issues will continue to grow side by side to fund the growing investment demand from both the private sector and the government in the region and it is not likely that one will grow at the expense of the other, according to a leading local fund manager.
- By Babu Das Augustine, Banking Editor
- Published: 00:03 July 16, 2007
Dubai: Corporate debt issues and equity issues will continue to grow side by side to fund the growing investment demand from both the private sector and the government in the region and it is not likely that one will grow at the expense of the other, according to a leading local fund manager.
"It is a good thing that the regional firms are increasingly resorting to both conventional and Islamic bond issues. However, currently the bond and equity issues in the region are mutually exclusive and are likely to remain so for some more time," said Shehab Gargash, CEO of Daman Investments.
According to a recent report by Thomson, an international information service provider, Gulf-based companies raised close to $4.5 billion through IPOs in the first six months of the year, surpassing the amount raised for the whole of last year. The corporate loans market has seen $36.5 billion worth of debt issued, up from $24.6 billion in the first half of 2006.
Currently, the region's bond and sukuk markets total $12.1 billion, up from $10.2 billion in last year's first half.
For the first time in the history of the UAE, armed with excellent credit ratings, the Abu Dhabi government is preparing for a dollar denominated international sovereign debt issue that would eventually serve as a benchmark for corporate debt issuers from the region.
According to Gargash, the growing popularity of debt issues will not have any adverse impact on the IPOs.
"There is a healthy pipeline of IPOs in the region. All markets with the lone exception of Saudi Arabia are showing signs of strong recovery and healthy growth. There is good chance that a number of public issues that have been postponed due to the poor market conditions last year will now come to the market," he said.
Despite the lacklustre secondary market, there have been plenty of IPO deals in the GCC.
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