Saudi Arabia: Out of the gloom
Saudi debt markets are set for a resilient year, with the promise of more to come.
The mood in Saudi Arabia is fearful. The stock market has crashed for the second time in two years. It has fallen to five-year lows and this time the big investors have been hurt. Oil prices have collapsed, along with petrochemicals prices.
But there is good news. Bankers and lawyers in Saudi Arabia have told Euromoney of at least four new local-currency bond or sukuk issuances in the pipeline.
More conservative observers say debt capital market issuance in Saudi Arabia will be equal to or slightly down on last year. This is healthy given the circumstances. One authoritative source reckons Saudi debt capital market issuance this year will be 25% higher than in 2008 at SAR12 billion ($3.2 billion).
Issuance is most likely to be in an Islamic format and in the low hundreds of millions of dollars each time. It will be from blue-chip companies, and privately placed (there is more bureaucracy involved in the public market).
Few will want to list on a stock market so lacking in confidence, although there are some big IPOs waiting.
One reason for the relative health of the debt capital markets in Saudi Arabia is that investors are looking for more stable returns after being burnt on the stock market yet again.