Dubai: The UAE market may see more bond issues by next year after the regulator eased rules for new issuances, a move that can lead to a robust bond market, market participants said on Tuesday.
“There is interest in the market for new bond issuance. I would think in the new year we would anticipate new applications,” said Micheal Grifferty, President, The Gulf Bond and Sukuk Association, which has 58 members in the region including HSBC, and Standard Chartered Bank, Emirates NBD among others.
“There has been a lot of issuance in the global market, but if there is any activity in the local market, that would be greater than in the recent past,” said Grifferty.
Bond and sukuk issuances in the UAE during the first half of this year exceeded Dh44.2 billion, accounting for almost 55 per cent of the total issuances in the Middle East, according to a report.
“With these initiatives from the SCA [Securities and Commodities Authority], we will receive a lot of applications and demand from the bond issuers,” said Khalifa Ahmad Rabba, Vice-President Market Operations Head at the Dubai Financial Market.
Currently, the DFM derives 90 per cent of its revenues from the equity market.
To boost the bond market, the SCA cut the minimum value of issuance to Dh10 million from the earlier Dh50 million, and also shortened the approval time to five working days.
Additionally, bond issuers are no longer required to provide a quarterly report as they may only provide an audited annual financial statement within 180 days of the year-end. The regulator has also introduced the Debt Securities Issuance Programme to allow for fast track process for seasoned issuers.
“We drive regulation that are fairly robust and in line with the best international standards. We want to have a vibrant and active bond and sukuk market and with new regulations we will see more issuances, trading and listing,” said Mounther H. Barakat, senior studies and research advisor at the SCA.
The SCA has also allowed clearing and settlement process outside the local market through Euroclear or Clearstream.
