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Muscat After recording growth for two consecutive years, the bond and sukuk issuances in the GCC countries recorded a decline in 2021 due to rise in oil incomes.
As expected, the decline was led by lower government issuances for two years in a row, whereas corporate issuances witnessed increase for the sixth consecutive year, Kuwait-based Kamco Investment said in a research note.
Crude oil prices that averaged at a three-year high level of US$70.9 per barrel was one of the key reasons for the decline in government issuances during 2021. On the other hand, a recovering economy post the lifting of restrictions related to COVID-19 encouraged investments by the private sector that resulted in a growth in issuances during the year.
In terms of type of instrument, sukuk issuances increased for the third consecutive year to reach the highest on record at US$57.2bn in 2021 as compared to US$52.1bn in 2020 in the GCC, Kamco Investment noted.
On the other, bond issuances declined for the first time since 2018 to reach US$89.5bn in 2021 as compared to US$99bn in 2020. Total issuances in the GCC reached US$146.7bn during 2021 as compared to US$151.1bn in 2020.
For 2022, we once again expect a small decline in total issuances in the GCC. Government issuances are expected to decline due to elevated oil prices and lower financing needs for social spending, whereas higher expected interest rates could also impact the growth in corporate issuances during the year, Kamco Investment said.
As per Kamco Investments analysis, total fixed income issuances for the MENA region clocked growth for the third consecutive year to reach a record high of US$233.2bn. However, the year-on-year growth was much smaller at 6.4 per cent as compared to double digit growth seen during the previous two years.
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