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Pricing proves to be crucial

Economies in the Middle East are in good shape for forthcoming bond issues, though some sovereign issuers have been deterred by the spread on Qatar's 1999 Eurobond. Lack of sovereign benchmarks has, until now, held back corporate issues but that may soon change.

       
The oil price supports credit fundamentals

With rumours spreading of forthcoming Eurobond new issues from several Arab countries, bond investors more used to analyzing Europe, Asia and the Americas are suddenly turning their attention to the region.


Issuers there have suffered false starts before. Last summer a handful of successful Eurobond issues emerged from the region, but several countries were scared away by the difficulty of pricing deals. Now bankers report that Qatar is discussing details for an issue due to be launched soon and other sovereign issuers are set to follow.


Egypt has announced plans for a debut issue this year and Oman may issue again. Saudi Arabia might be worth a long-odds bet but the cautious should stick with Lebanon's return to tap foreign bond investors. Either way, says Ziad Makkawi, managing director of capital markets at Dubai-based Arabian General Investment Corporation (Agico): "The debt markets in the Arab world are poised to see tremendous growth, which will be reflected on the foreign currency as well as local currency issues."



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