Abu Dhabi Despite the impact the European debt crisis has on the region, the investor appetite for GCC fixed income will continue to dominate in 2012, a senior official at the National Bank of Abu Dhabi said.
"More investors are seeing better value in GCC/EM bonds relative to similarly rated corporate and sovereign bonds in developed countries," said Sameh Al Qubaisi, General Manager of Corporate Coverage and e-Commerce at the National Bank of Abu Dhabi.
"Investor risk-on mode together with historically low interest rates coupled with the region's growth plans in countries such as Qatar, Saudi Arabia and the UAE will definitely continue to induce and positively prolong the supply and demand dynamics for fixed income in the region," he said.
When asked about the outlook for 2012, Al Qubaisi said the year had a very good start with two financial sukuk from Abu Dhabi and Dubai. "Both deals [FGB and EIB] were several times oversubscribed and continue to trade inside their issue price in the secondary on the bank of rise-on-appetite in the global credit markets.
"Positive sentiment continued in February with two corporates [MAF and Dolphin] from the UAE printing away successful deals, most notably Dolphin Energy, which printed a 10-year conventional bullet of $1 billion (Dh3.68 billion) with overwhelming international demand namely from US investors, which allowed them to tap an additional $300 million before settlement date and continued to trade well inside the cash price re-offer levels at issuance."
The Mena International Debt Capital Markets (DCM) reached $26 billion via 27 deals in 2011, down 19 per cent on 2010 which was at $32.2 billion via 39 deals. So far, 2012 has witnessed 10 deals across the region.
"Investors like this region and investing in this region," he said. "It's appealing for the international investor and alternatively, he is also afraid, which is why there's a lot of control."
In January of this year, NBAD launched a new mutual fund called the NBAD Cautious Income Fund, which offers investors returns with low levels of risk. This open-ended fund gathered Dh170 million, Al Qubaisi said.