GCC governments have issued about $45 billion in bonds and sukuk so far this year, putting the region’s sovereigns on track for the most debt issuance since 2020. The volume has increased significantly this year, with the first half of 2024 alone reaching well above the $33 billion issued in the whole of last year.
Oil prices have averaged $83 per barrel so far this year, similar to the average for last year, and several countries that have issued bonds and sukuk this year are expected to run budget surpluses in 2024, including the UAE and Qatar.
For these issuers, the capital was raised not to finance regular budget spending but to build a benchmark yield curve against which corporates could more efficiently price their debt, and in the case of Qatar, to fund environmentally friendly projects specifically. The sums raised were relatively small: Abu Dhabi raised a total of $5 billion in three tranches of five, 10 and 30 years, while Qatar issued its first-ever green bond of $2.5 billion across five and 10-year tranches.
The bulk of sovereign debt issuance so far this year has been from Saudi Arabia, which has raised over $35 billion in bonds and sukuk year-to-date, more than three-quarters of total GCC sovereign issuance. About half of this was in dollar-denominated debt. Last year, Saudi Arabia also accounted for 77 per cent of total GCC government bond and sukuk issuance.
Separately, the secondary offering of Aramco shares raised another $11.2 billion in capital for the government last week. Emirates NBD expects the Saudi budget to run a deficit of about 4.2 per cent of gross domestic product this year or approximately $45 billion.
The funds raised through both debt and equity capital markets will be enough to cover this, but it is possible that the kingdom could tap capital markets again in H2. This suggests that the total capital raised this year is likely to exceed what is required just to finance the budget deficit.
Additionally, the Public Investment Fund has also been active in debt capital markets, raising about $8 billion so far this year through bonds and sukuk, including most recently a pound-denominated bond last week.
The capital raised by both the government of Saudi Arabia and PIF will be partly used to fund the ambitious infrastructure investment that is required to deliver the medium- and long-term goals of the kingdom, including economic diversification.
According to data from MEED Projects, over $100 billion worth of projects were awarded in Saudi Arabia last year, up 75 per cent from the value of contracts awarded in 2022. The bulk of these projects are in the construction, power and transport sectors. More than 80 per cent of projects currently in execution are government projects.
In addition to the value of projects that have been awarded and are currently in execution, there is a significant pipeline of planned projects in the kingdom. MEED data point to the value of projects in planning stages – both public and private – being in the region of $735 billion at the time of writing.
However, the bulk of these projects are in a design or study phase, with a significantly smaller share in more advanced stages, meaning that potentially not all these projects will make it to the execution phase. This figure doesn’t include the full budgets of all the giga-projects, as not all the funds have been allocated to specific subprojects yet.
While there is certainly room to scale back some of the planned spending, the government of Saudi Arabia has committed to hosting several major international events over the next decade, including the Asian Winter Games in Neom in 2029, the World Expo in Riyadh in 2030, and the FIFA World Cup in 2034.
These are fixed deadlines by which time the host cities must be able to accommodate and run these events, and for which the necessary infrastructure must be complete. The funding requirements are thus likely to be significant not just in 2024, but over the next few years as well. We expect Saudi Arabia, PIF and related entities to continue to drive GCC government bonds and sukuk issuance over the next three years at least.
Khatija Haque is chief economist and head of research at Emirates NBD
Muslim Council of Elders condemns terrorism on religious sites
The Muslim Council of Elders has strongly condemned the criminal attacks on religious sites in Britain.
It firmly rejected “acts of terrorism, which constitute a flagrant violation of the sanctity of houses of worship”.
“Attacking places of worship is a form of terrorism and extremism that threatens peace and stability within societies,” it said.
The council also warned against the rise of hate speech, racism, extremism and Islamophobia. It urged the international community to join efforts to promote tolerance and peaceful coexistence.
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
Skoda Superb Specs
Engine: 2-litre TSI petrol
Power: 190hp
Torque: 320Nm
Price: From Dh147,000
Available: Now
UAE currency: the story behind the money in your pockets
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Match info
Who: India v Afghanistan
What: One-off Test match, Bengaluru
When: June 14 to 18
TV: OSN Sports Cricket HD, 8am starts
Online: OSN Play (subscribers only)
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
WWE TLC results
Asuka won the SmackDown Women's title in a TLC triple threat with Becky Lynch and Charlotte Flair
Dean Ambrose won the Intercontinental title against Seth Rollins
Daniel Bryan retained the WWE World Heavyweight Championship against AJ Styles
Ronda Rousey retained the Raw Women's Championship against Nia Jax
Rey Mysterio beat Randy Orton in a chairs match
Finn Balor defeated Drew McIntyre
Natalya beat Ruby Riott in a tables match
Braun Strowman beat Baron Corbin in a TLC match
Sheamus and Cesaro retained the SmackDown Tag Titles against The Usos and New Day
R-Truth and Carmella won the Mixed Match Challenge by beating Jinder Mahal and Alicia Fox
Libya's Gold
UN Panel of Experts found regime secretly sold a fifth of the country's gold reserves.
The panel’s 2017 report followed a trail to West Africa where large sums of cash and gold were hidden by Abdullah Al Senussi, Qaddafi’s former intelligence chief, in 2011.
Cases filled with cash that was said to amount to $560m in 100 dollar notes, that was kept by a group of Libyans in Ouagadougou, Burkina Faso.
A second stash was said to have been held in Accra, Ghana, inside boxes at the local offices of an international human rights organisation based in France.
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
The Case For Trump
By Victor Davis Hanson
MATCH INFO
Uefa Champions League quarter-final (first-leg score):
Juventus (1) v Ajax (1), Tuesday, 11pm UAE
Match will be shown on BeIN Sports
