New issues for the remainder of 2017 are set to remain high, with estimates in excess of USD 20 billion, as a result of favourable market conditions, according to Fisch Asset Management, a global leader in convertible and corporate bond strategies.

An encouraging landscape for new bond issuances in the GCC will likely see a USD sovereign deal between Saudi and Bahrain, while Oman is anticipated to confirm new issues, depending on the size of deficits. UAE and Kuwait are very well positioned to take advantage of current conditions – resulting in new issues, provided there is a pull factor from investors. 

Qatar will weather the storm and continue to grow in 2018 and 2019 – the current embargo makes things more difficult, but not impossible: it is likely to monetize some other assets, such as the stake in Credit Suisse and avoid unnecessary risks.

Philipp Good, CEO of Fisch Asset Management commented:

“The new issues season kicked off again on 28th August with roadshows and with the 4th September US holiday. Very important to this season are some pre-funding of maturities of 2018 bonds, including: Mubadala (IPIC 2018 bond), Taqa, Aldar and Sabic. All those companies and more can benefit from great market conditions by pre-funding those maturities early. Further, there will be some Government related entities that will conduct some new issues – primarily debut issues. Those are characterized by Investment Grade ratings, who can benefit from cheap funding and extend their duration in the bond market.”

Saudi Banks will be patient since they have larger deposits domestically. Sovereign has established the curve in the Kingdom, but experience has shown that the banks don’t move fast. Further, Saudi Telecom could be a well-received corporate entity tapping the market this year.

There are many contributing factors to the success of Q4 2017, including synchronized global growth and a low interest environment that is beneficial for emerging markets and political stability. 

 

About Fisch Asset Management

Independence and growth have been Fisch Asset Management’s hallmarks since its foundation by Kurt Fisch and Dr. Pius Fisch in 1994. The Company’s independence rests on the ownership of all shares in Fisch Asset Management AG lying with the Executive Committee and employees. Since foundation, Fisch Asset Management has grown to 84 colleagues, including one of the world’s largest convertible bond teams. The Company specialises in credit research and analysis, with an exceptional record in convertible, high yield and corporate bond strategies. Assets under management (AUM) total USD 10.6 billion, as at 30 June 2017. As a licensed securities dealer, the Company is regulated by the Swiss Financial Market Supervisory Authority (FINMA). Fisch Asset Management is a signatory of the United Nations Principles for Responsible Investment (UN PRI).

 

Source: Instinctif Partners