GCC bond markets slide 62.4%

by Rebecca Bundhun

Conventional and Islamic bond (sukuk) markets decreased substantially in the GCC in 2008, but sukuk managed to grow its market share, a new report by the Kuwait Financial Centre (Markaz) has revealed.

The GCC aggregate bond market plummeted to $18.1 billion in 2008, down by 62.4 percent compared with the amount raised in 2007.

While volumes were down dramatically, the Markaz reports shows that the sukuk market share continued to grow last year to reach 45 percent of total the value issued by GCC bond markets, up from 40 percent in 2007.
The sukuk market raised $8.1 billion last year, while conventional bonds raised $9.98 billion, Markaz said.

Nearly 73 percent of this total value was issued in the first half of the year.

Corporate issuances made up a larger segment of the aggregate bond market than sovereign issuance, accounting for $9.6 billion and a market share of 53.4 percent.

The UAE had the majority share of the amount raised, with $8.8 billion or 49 percent of the total amount through 21 issues, Markaz said.

Standard & Poor’s on Wednesday issued a report stating that global sukuk issuance fell by more than 56 percent last year compared with 2007, to $14.9 billion, due to the global turmoil, but said that the long-term prospects for sukuk are good.