JPMorgan, Citigroup see ME bond deals slipping from record

dubai — JPMorgan Chase & Co and Citigroup, the biggest debt arrangers in the Middle East and North Africa, expect regional sales to slow for the rest of the year after sovereigns raised a record $37 billion in the first half.

“We have seen a significant amount of issuance early in the year and it’s not surprising that we are starting to see things slow down,” Hani Deaibes, JPMorgan’s regional head of debt-capital markets, said in an interview. “While we expect activity to pick up a bit later in the year, we don’t see a substantial pipeline at the moment.”

Sovereigns and companies in the region raised more than $55 billion in bonds in the first six months of 2017, making it the busiest first half in the region since Bloomberg started tracking data in 2006. Most of the sales were by governments tapping international investors to fill budget shortfalls brought on by the slump in crude prices. The biggest US bank displaced HSBC Holdings as the top Gulf debt arranger last year and in the first half.

Citigroup, the region’s secondbiggest arranger on bond sales, said that while this year is unlikely to beat 2016’s record deal volumes, it will be close to that level as governments and companies rush back to the market before the end of the year.

“The pipeline is looking quiet robust,” said Iman Abdel Khalek, head of MENA debt capital markets at Citigroup. “It’s been very quiet in the last month-and-a-half and I would say it will continue to be quiet till September. But the pipeline is there. We will continue to see sovereigns coming to do their funding. We will also see more corporates coming to the market before the end of the year.”

Bond sales from the region this year are likely to reach similar levels to last year when $79 billion was sold as long as oil prices remain low, JPMorgan’s Deaibes said.

JPMorgan has worked on some of this year’s biggest deals, including Saudi Arabia’s $9 billion debut Islamic bond and Kuwait’s $8 billion sovereign sale.