Dubai: Commercial debt issuance by 12 sovereigns in the Middle East and North Africa (Mena) is expected to exceed $56 billion (Dh205.67 billion) in 2014 and out of this 67 per cent or $38 billion will be to refinance maturing long-term commercial debt, according to global rating agency Standard & Poor’s.

While the total commercial borrowing from the region is estimated to be up 27 per cent, the net borrowings (total debt issuance minus refinancing the existing debt) is estimated at $18 billion.

“We project that rated Mena sovereigns’ commercial debt stock will reach an equivalent of $462 billion by the end of 2014, up by $17 billion, or 4 per cent from 2013. Adding in bilateral and multilateral debt, the total stock will reach $504 billion, a year-on-year increase of $15 billion, or 3 per cent. We expect that outstanding short-term commercial debt will reach $145 billion at year-end 2014,” said Trevor Cullinan, an analyst with S & P.

Sovereign debt capital markets are relatively underdeveloped in the GCC and it is not anticipated that Abu Dhabi, Kuwait, Qatar, or Saudi Arabia to issue long-term debt in 2014.

“In our view, financing these states’ large investment programmes could result in weaker government balances, but as long as oil prices remain high, we expect them to continue to post fiscal surpluses. We expect the majority of borrowing related to these investment programs to take place at the government-related entity level rather than through central government borrowing,” Cullinan said.

Overall, sovereign issuance from GCC states are expected to be very low with smaller GCC states of Oman and Bahrain, along with the emirates of Ras Al Khaimah and Sharjah, are expected to issue commercial debt in the market. Ras Al Khaimah issued a $500 million bond under its $2 billion sukuk issuance programme (RAK Capital) in 2013. Ras Al Khaimah is expected to issue again in 2014 in order to refinance about $400 million in debt coming due rather than running down its cash balances.

S & P anticipates an inaugural issuance of about $1 billion treasury bills by the emirate of Abu Dhabi in 2014.

According to S & P’s calculations, Jordan will face the highest debt rollover ratio (including short-term debt) among rated Mena sovereigns, reaching 49 per cent of total debt, followed by Egypt (42 per cent).

“We expect three sovereigns with large fiscal deficits — Egypt, Morocco, and Lebanon — to issue the lion’s share of government debt in the region in 2014, totalling $44 billion, or just over three-quarters of the total.

“Of these three sovereigns, Egypt has a substantial amount of short-term debt (45 per cent of the total) as does Jordan (30 per cent), partly explaining their very high rollover ratios,” said Cullinan.

Jordan will remain the Mena sovereign with the largest share of bilateral and multilateral debt in 2014 (26 per cent of the total), followed by Morocco, with 17 per cent. Most of Egypt’s government financing takes place in the local market with state-owned banks and the central bank of Egypt.