MENA bond issuances tripled in value y-o-y in the first nine months of 2023

MENA debt issuances hit USD 61.1 bn in the first nine months of 2023: Debt issuances in the MENA region have nearly tripled in value y-o-y during the first nine months of 2023 to USD 61.1 bn, according to data from the London Stock Exchange Group’s (LSEG) Deals Intelligencereported on by Zawya.

It’s also been a good nine months for sukuk bonds: The sukuk bonds market registered its highest-ever nine-month period in terms of total value in 2023. The USD 26.1 bn raised accounted for 43% of total bond issuances across the region, up from 38% from the same period last year.

Saudi Arabia is leading the bond issuances boom: Saudi Arabia raised 50% of total bond proceeds during the first nine months of the year, followed by the UAE with 32% and Bahrain with 7%.

Government bodies and private sector issuers played an equal part: Issuances from state-related institutions accounted for 44% of the total value recorded, while private financial issuers drummed up 43% of the total amount.

But, figures are still down from 2017 to 2021: Despite the significant uptick in total value from the same period in 2022, figures for the first nine months of this year are still significantly lower than that recorded in the same period from 2017 to 2021.

Heavy outflows push China to its first-ever foreign investment deficit: China’s direct investment liabilities — a measure of foreign direct investments that includes foreign companies’ retained earnings — stood at negative USD 11.8 bn in 3Q 2023, according to the country’s quarterly balance of payments, marking the country’s first quarterly deficit since it began compiling the data in 1998. The deficit can be attributed to China seeing about USD 75 bn in net outflows in September, its biggest monthly outflows since 2016, on the back of an escalating crisis in its property sector.

Also driving the outflows: China’s 'lower for longer' interest rates, compared to the 'higher for longer' interest rates everywhere else, which “has led firms to remit their retained earnings out of the country,” Capital Economics’ Julian Evans-Pritchard told Reuters.

It’s not looking good: Capital continued to flow out of the country in October, with global funds pulling USD 3.1 bn from China and Hong Kong, Reuters wrote citing a Morgan Stanley report. “Increasing geopolitical tensions will hamper China's ability to attract FDI and instead [foreign companies will] favor emerging markets that are more friendly to the west,” Evans-Pritchard added.

ALSO WORTH NOTING- One vote for the Fed raising rates in Jan: Barclays now expects the US Federal Reserve to raise interest rates by 25 bps in January from its initial expectation for a December hike. The Fed left rates unchanged for a second consecutive meeting last week. (Reuters)

THE CLOSING BELL-

The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 4.9 bn (101.7% above the 90-day average). Local investors were net sellers. The index is up 58.0% YTD.

In the green: Orascom Construction (+5.2%), Fawry (+4.7%) and Edita (+3.5%).

In the red: AMOC (-8.3%), Qalaa Holdings (-3.2%) and Oriental Weavers (-3.0%).

Asian markets are in the red this morning as the bounce in global equities that accompanied last week’s Federal Reserve meeting fades. Expect more of the same in Europe and the US later today, according to stock futures.