gcc bond chart book - adcb personal banking · 2019-04-23 · gcc bond markets –key takeaways...

GCC Bond Chart BookA comprehensive overview of the risk and return parameters of the key securities in the GCC Fixed Income space

Prerana Seth

Luciano Jannelli

Kishore Muktinutalapati

Mohammed Al Hemeiri

Noor Alameri

1Q 2019

GCC Bond Markets – Key Takeaways

This GCC Bond Chart Book provides a comprehensive overview of the bond market performance in 1Q 2019 (Chapter

I), the trends in GCC dollar bond issuances (Chapter II) and finally the bond valuations compared mostly with other

emerging market peers (Chapter III and Chapter IV).

Global fixed income markets kick-started the year on a positive note with more dovish tones coming from the G3

central banks. Emerging market bonds have mostly recouped their losses of 2018. In line with the trend seen in

emerging market bond markets, GCC sovereign dollar bonds (except Oman) have also posted positive returns in 1Q

2019 (Page 5). Similarly, GCC corporate credits have also performed well, in line with trend seen in the corporate bond

markets of other EM regions (Page 8) and also amidst the decline in oil prices. The upward tick in oil prices has also

been a positive factor for the GCC bond market spreads.

In terms of bond market issuances, Saudi and Qatar continue to dominate the sovereign bond issuances (Page 14).

With the two countries having raised borrowings in 1Q19, total GCC sovereign dollar bond issuance has already

reached more than 50% of last year’s overall bond issuance. Pick-up in sovereign bond issuance is not surprising

considering majority of the GCC countries have moved to an expansionary fiscal policy to boost growth (Page 11). We

expect the demand to be easily absorbed with the phase-wise inclusion of GCC bonds in JP Morgan’s Emerging

Market Bond Index attracting sizeable inflows (Page 16 and 17). On the other hand, corporate bond issuance was

subdued in 1Q19 amidst global market uncertainty, with bulk of issuance coming from financial Institutions (Page 15).

However, corporate bond issuance is likely to pick up in the remainder of the year as narrower spreads and lower

yields should provide an opportunity for bond issuers to raise borrowing at lower rates.

We moved to a tactical overweight stance on emerging markets in March, within which our key preference remains for

GCC bond markets. Our key takeaway is – GCC markets will remain relatively resilient, even during periods of higher

volatility due to their low correlation characteristics. In addition, when comparing GCC sovereign bond market prices

with global sovereign bond market prices we can see that - for each credit class - GCC bonds still appear to be

cheaper (7-29). We have, however, reduced our preference for Oman bonds on concerns of mounting fiscal

risks and now particularly favor high-quality GCC sovereigns.

2

Index

Chapter I: GCC bond performance in 1Q19

Chapter II: Primary market bond issuances in

GCC

Chapter III: Credit rating valuation

Chapter IV: GCC valuation analysis

3

Chapter I: GCC bond market

performance in 1Q19

GCC countries: US dollar bond performance

versus EM indices

5

Source: Bloomberg, Barclays indices, ADCB

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Bahrain SaudiArabia

UAE Kuwait Qatar

% r

etu

rn

1Q 2019

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

EM EMLATAM

EMEMEA

EMAsia

% r

etu

rn

GCC Sovereign: 10-year dollar bond yield

performance

6

Source: Bloomberg, ADCB

2.8

3.3

3.8

4.3

4.8

5.3

Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

10

-yea

r b

on

d y

ield

(%

)

Better quality GCC sovereigns yields have declined in line with EM peers

Mexico Qatar Saudi Arabia Abu Dhabi

South Korea Indonesia Dubai Kuwait

3.75

4.75

5.75

6.75

7.75

8.75

9.75

10.75

11.75


10

-yea

r b

on

d y

ield

(%

)

Bahrain has outperformed its EM peers

Brazil BahrainOman Argentina

GCC Sovereign: 30-year dollar bond yield

performance

7


3

3.5

4

4.5

5

5.5

6


30

-ye

ar b

on

d y

ield

(%

)

Dubai is trading at attractive levels versus its EM peers

Mexico Qatar Saudi Arabia Abu Dhabi

South Korea Indonesia Dubai

5

6

7

8

9

10

11


30

-yea

r b

on

d y

ield

(%

)

Bahrain has outperformed its EM peers

Turkey Bahrain Oman Argentina Brazil

GCC corporate bond performance

8

Source: Credit Suisse Indices, Bloomberg Barclays Indices, Bloomberg, ADCB

150

200

250

300

350

400

450

500

550

600

Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

Spre

ad (

bp

)

EM middle east has performed well relative to its peers

EM Middle East Corp. Bond IndexEM Asia Corp. Bond IndexEM East. Europe Corp. Bond IndexEM EMEA Corp. Bond Index

20

30

40

50

60

70

80

90

100

110

120

125

130

135

140

145

150

155

160

165

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

USD

/bb

l

GCC credit has positively reacted to the upward move in oil prices

GCC credit index (LHS) Brent Crude (RHS)

GCC CDS performance versus EM

9


-100 -50 0 50 100

EgyptColombiaMalaysia

BahrainIndonesia

MexicoPhilippines

BrazilPeruIndia

South AfricaSaudi Arabia

RussiaChile

ChinaArgentina

QatarHungary

South KoreaAbu Dhabi

OmanThailand

KuwaitPolandCzechDubai

RomaniaTurkey

Bahrain CDS spreads have tightened the most

1Q 19 change in 5-year CDS

70

90

110

130

150

170

190

210

Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19

CD

S sp

read

(In

dex

ed a

t Ja

n 2

01

8=1

00

)

CDS spreads have tightened in line with EM

Bahrain Dubai Saudi Arabia Kuwait

Abu Dhabi Oman EM average

Chapter II: Primary market bond

issuances in GCC

11

GCC economies to expand fiscal budgets in 2019

-25

-15

-5

5

15

25

35

45

2008 2010 2012 2014 2016 2018

Fisc

al b

alan

ce (

% o

f G

DP

)

..will need to raise borrowing to fund their fiscal deficits

Bahrain Kuwait OmanQatar Saudi Arabia UAE

-40

-20

0

20

40

60

2008 2010 2012 2014 2016 2018

Cu

rren

t A

cco

un

t B

alan

ce (

% o

f G

DP

)

Bahrain and Oman have weak external balances..

Bahrain Kuwait Oman

Qatar Saudi Arabia UAE

Source: IMF, ADCB

12

Reduced dependency on oil

Source: IIF, Bloomberg, ADCB

SaudiKuwait

UAEQatar

Oman Bahrain

30%

40%

50%

60%

70%

80%

90%

40 60 80 100 120

oil

reve

nu

e (%

of

tota

l rev

enu

e)

2018 budget break-even oil price

Dependency on Oil revenue

0

20

40

60

80

100

120

140

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Oil

bre

akev

en (

USD

/bb

l)

Oil breakevens have declined

Saudi Kuwait UAE Qatar Oman Bahrain

13

More diversification needed

Source: IIF, ADCB

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bahrain Oman Saudi Arabia Kuwait UAE Qatar

Oil

reve

nu

e (%

of

tota

l rev

enu

e)

2013 2014 2015 2016 2017 2018f 2019f

Sovereign dollar bond issuance seen

increasing this year

14

Source: Bloomberg, ADCBNote: 2019* data is from 31st Dec 2018 to 31st March 2019

4 3 3 3

40

50

37

20

0

10

20

30

40

50

60

2012 2013 2014 2015 2016 2017 2018 2019*

USD

bn

Sovereign dollar bond issuance in 2019 so far, more than half of 2018

GCC sovereign dollar bond issuance (USD bn)

0 10 20 30 40 50 60

2017

2018

2019*

USDbn

Bulk of issuance in 2019 from Qatar and Saudi Arabia

UAE Bahrain Kuwait Oman Qatar Saudi Arabia

Corporate dollar bond issuance has been

subdued so far..but likely to pick up

15

Source: Bloomberg, ADCBNote: 2019* data is from 31st Dec 2018 to 31st March 2019

9

1922

14

24

31

42

11

0

5

10

15

20

25

30

35

40

45

2012 2013 2014 2015 2016 2017 2018 2019*

USD

bn

Corporate dollar bond issuance has been subdued so far

0

5

10

15

20

25

30

35

40

2017 2018 2019*

USD

bn

Financials and agencies again dominate issuances in 1Q19

Agency Financials Industrial Real Estate Utility

16

Inclusion in JP Morgan bond index to absorb demand


• Sovereign and quasi-sovereign debt issuers

from Saudi Arabia, Qatar, UAE, Bahrain and

Kuwait eligible to be included in the EMBI

Global Diversified (EMBIGD), EMBI Global

(EMBIG) and EURO-EMBIG indices

• Entry is being phased over nine months

from January 2019 (31st Jan 2019– 30th Sep

2019)

• Both conventional bonds and sukuk to be

included. For the sukuk to be included, a

credit rating from at least one of the three

major rating agencies is mandatory

• With the inclusion, GCC countries will

represent 11.2% of the JP Morgan's EMBI

Global Diversified and EMBI Global series

• The GCC weighting will gradually increase to

17% of the overall index

• The inclusion is likely to attract sizeable

fund inflows (USD30-40bn), leading to tighter

spreads

3.1

2.72.6

2.10.8

Potential weight in the EMBI global diversified index (%)

Saudi Arabia Qatar UAE Bahrain Kuwait

Improve liquidity

VisibilityLower cost of funding

17

Scope for more inflows due to index inclusion

Source: HSBC, ADCB

0

0.1

0.2

0.3

0.4

0.5

0.6

0

100

200

300

400

500

600

Sau

di

Ven

ezu

ala

Equ

ado

r

Nig

eria

UA

E

Uru

guay

Arg

enti

na

Leb

ano

n

Ch

ina

Mal

aysi

a

pp

t

USD

m

Top 10 biggest increase in allocations (As of Jan'19)

Net inflows (LHS) Change in weighting (RHS)

0

0.5

1

1.5

2

2.5

3

3.5

Saudi Qatar UAE Bahrain Kuwait

Scope for more inflows into GCC bonds

Benchmark Current fund weight (Jan'19)

Saudi’s first dollar bond sale of 2019 was a

success

18Note: “T” refers to similar-maturity treasuries Source: Bloomberg, ADCB

7.5

27

0

10

20

30

40

USD

bn

Strong demand at 1st bond sale of 2019

Issue size Total bids

4

3.5

Issue size (bn)

10y 30y

T+175

T+230

T+200

T+250

130

150

170

190

210

230

250

270

10y 30y

Saudi USD7.5bn bond sale

Final Pricing Initial Pricing

0%

20%

40%

60%

80%

Fundmanagers

Banks Central banks Insurance &pension funds

% o

f th

e p

rim

ary

issu

ance

Subscribers' share of total issuance

10y 30y

0%

10%

20%

30%

40%

50%

US Europe Asia Middleeast

UK% o

f th

e p

rim

ary

issu

ance

Subscribers' nationality as a share of total issuance

10y 30y

Major corporate dollar bond deals of 1Q 2019

19

Note: Deals of only amount issued greater than USD500m are shortlisted, *Priced at issue indicated as spread over Treasury (T) or as mid-swap spread (M) , Bloomberg sector classification has been used, ^Issuer rating used where applicable, **Rating equivalent to Fitch ratingSource: Bloomberg

Corporate IssuerBloomberg Ticker Sector Country

Amount Issued Coupon Maturity

Maturity Type Issue Date

Moody Rtg^

Priced at issue (spread, bp)*

QNB Finance Ltd QNBK Agency QA 1000 3.50 3/28/2024 AT MATURITY 3/28/2019 Aa3 T+135.5

Emirates NBD PJSC EBIUH Agency AE 1000 6.13 - PERP/CALL 3/20/2019 A3 T+366

Fab Sukuk Co Ltd FABUH Agency AE 1000 3.88 1/22/2024 AT MATURITY 1/22/2019 Aa3 M+130

QIB Sukuk Ltd QIBKQDFinancial

Institutions QA 750 3.98 3/26/2024 AT MATURITY 3/26/2019 A M+150

DIB Tier 1 Sukuk 3 Ltd DIBUHFinancial

Institutions AE 750 6.25 - PERP/CALL 1/22/2019 - T+366

Emirates Development Bank PJSC EMDEBK Agency AE 750 3.52 3/6/2024 AT MATURITY 3/6/2019 Aa3** M+98

Mumtalakat Sukuk Holding Co MUMTAK Agency BH 600 5.63 2/27/2024 AT MATURITY 2/27/2019 Ba3** T+316

Almarai Sukuk Ltd ALMARA Industrial SA 500 4.31 3/5/2024 AT MATURITY 3/5/2019 Baa3 M+180

QIIB Senior Sukuk Ltd QIIKQDFinancial

Institutions QA 500 4.26 3/5/2024 AT MATURITY 3/5/2019 A2 M+175

Mashreqbank PSC MASQUHFinancial

Institutions AE 500 4.25 2/26/2024 AT MATURITY 2/26/2019 Baa1 M+175

QNB Finance Ltd QNBK Agency QA 500 0.00 3/12/2024 AT MATURITY 3/12/2019 Aa3 -

20

Abu Dhabi Sovereign Dollar Debt Maturity Profile


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

20

47

USD

bn

Principal Interest

21

Dubai Sovereign Dollar Debt Maturity Profile


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

USD

bn

Principal Interest

22

Saudi Arabia Sovereign Dollar Debt Maturity Profile


0

1

2

3

4

5

6

7

82

01

92

02

02

02

12

02

22

02

32

02

42

02

52

02

62

02

72

02

82

02

92

03

02

03

12

03

22

03

32

03

42

03

52

03

62

03

72

03

82

03

92

04

02

04

12

04

22

04

32

04

42

04

52

04

62

04

72

04

82

04

92

05

0

USD

bn

Principal Interest

23

Kuwait Sovereign Dollar Debt Maturity Profile


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2019 2020 2021 2022 2023 2024 2025 2026 2027

USD

bn

Principal Interest

24

Bahrain Sovereign Dollar Debt Maturity Profile


0

0.5

1

1.5

2

2.52

01

92

02

02

02

12

02

22

02

32

02

42

02

52

02

62

02

72

02

82

02

92

03

02

03

12

03

22

03

32

03

42

03

52

03

62

03

72

03

82

03

92

04

02

04

12

04

22

04

32

04

42

04

52

04

62

04

7

USD

bn

Principal Interest

25

Oman Sovereign Dollar Debt Maturity Profile


0

0.5

1

1.5

2

2.5

3

3.5

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

20

47

20

48

USD

bn

Principal Interest

Chapter III: Credit rating

valuation

GCC sovereigns vs EM peers- 10yr segment

27

Note: The ratings refer to Fitch ratings, * DEWA credit rating used as a proxy for Dubai credit rating Source: Bloomberg, ADCB

AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B

Brazil

Colombia

Mexico

Chile Peru

Turkey

Russia

South Africa

QatarSaudi Arabia

Abu Dhabi

Bahrain

Kuwait

China

Indonesia

Philippines

Oman

Argentina

Egypt

Dubai*

3

4

5

6

7

8

9

10

11

12

10

-yea

r yi

eld

s

GCC sovereigns trading cheap versus peers

GCC vs EM peers- 30yr segment

28


AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B

BrazilMexico

Chile Peru

Turkey

Russia

South Africa

QatarSaudi Arabia

Abu Dhabi

Bahrain

Romania

South Korea

Indonesia

Oman

Argentina

Egypt

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

30

-yea

r yi

eld

s

GCC sovereigns appear cheap versus other EM

GCC CDS versus ratings

29


AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB-

Brazil

ColombiaMexico

ChilePeru

Turkey

Russia

South Africa

QatarSaudi Arabia

Dubai*

HungaryAbu Dhabi

Poland

Bahrain

Romania

Czech

Kuwait

South Korea

China

IndonesiaIndia

Malaysia

PhilippinesThailandUK

Spain

Italy

France

AustriaBelgium

Oman

0

50

100

150

200

250

300

350

400

450

CD

S sp

read

s (b

p)

GCC bond markets attractive versus its EM peers

GCC Financials credit rating

30

Note: The ratings refer to Fitch ratings, *S&P rating used as substitute where the corporate/bank not rated by Fitch ratings Source: Bloomberg, ADCB

FAB

HSB

C M

EN

BK

AD

CB

AD

IBEm

irat

es Is

lam

ic B

ank

Emir

ates

NB

DU

NB

CB

KG

ulf

Ban

kA

l Ah

li B

ank

of

Kuw

ait

Al A

hli

Un

ited

ban

kB

urg

an B

ank

Kuw

ait

Inte

rnat

ion

al B

ank

Kuw

ait

Fin

ance

Ho

use

Bo

ub

yan

Ban

kW

arb

a B

ank

Qat

ar N

atio

nal

Ban

kD

ub

ai Is

lam

ic B

ank

Mas

hre

qA

hli

Ban

k Q

SCQ

atar

Isla

mic

Ban

kD

OH

A B

AN

KA

l Kh

aliji

BA

NK

CB

DN

oo

r B

ank

Al-

Bila

d*

RA

KB

AN

kN

BF

Shar

jah

Isla

mic

Ban

kN

atio

nal

Co

mm

erci

al B

ank

Ban

qu

e Sa

ud

i Fra

nsi

Riy

ad B

ank

Sam

ba

Fin

anci

al g

rou

pA

l Raj

hi B

ank

Ara

b n

atio

nal

ban

kA

hli

Un

ited

Ban

kG

ulf

Intl

Ban

kA

linm

a B

ank

Sau

di H

olla

nd

iB

ank

AlJ

azir

aSa

ud

i In

vest

men

t B

ank

Un

ited

Ara

b b

ank

Sau

di B

riti

sh B

ank

Ban

k M

usc

atN

BO

Ban

k D

ho

far

Ban

k So

har

SO

AG

NB

BO

man

Ara

b B

ank*

Ban

k N

izw

a*B

ahra

in Is

lam

ic B

ank

GCC Financials

AA-

A+

A

A-

BBB+

BBB

BBB-

BB+

BB

BB-

B+

B

GCC corporates credit rating

31

Note: The ratings refer to S&P ratings, ** Fitch ratings used as substitute where the corporate/bank not rated by S&P ratings, ^ refers to Moody’s ratingsSource: Bloomberg, ADCB

Mu

bad

ala

IPIC

Etis

alat

Qat

ari D

iar

Qat

ari P

etro

leu

m

Do

lph

in e

ner

gy**

Nak

ilat

RA

SGA

S

Etih

ad**

Oo

red

oo SE

CO

SAB

IC

Sau

di T

ele

com

TAQ

A**

DEW

A

DP

Wo

rld

**

Jafz

**

MA

F

Ald

ar^

DIF

C

Kuw

ait

pro

ject

s C

o

Emaa

r

OM

GR

ID*

*

Dam

ac

Ezd

an H

old

ing

Bat

elco

Top

az w

orl

d**

Kuw

ait

ener

gy

GCC Corporates

AA

AA-

A+

A

A-

BBB+

BBB

BBB-

BB+

BB

BB-

B+

B

B-

CCC+

Chapter IV: GCC valuation

analysis

GCC sovereign dollar yield curves

33Source: Bloomberg, ADCBNote: S refers to Sukuk

BHRAIN 6.125 7/22 BHRAIN 5.624 2/24 S

BHRAIN 6.75 9/29

BHRAIN 7.5 9/47

OMAN 3.875 3/22OMAN 4.125 1/23

OMAN 5.625 1/28

OMAN 6.75 1/48

4

5

6

7

8

3yr 5yr 10yr 30yr

ADGB 2.5 10/22 ADGB 3.125 5/26

ADGB 3.125 10/27

ADGB 4.125 10/47

DUGB 6.45 05/22

DUGB 3.89 03/25

DUGB 5 04/29

DUGB 5.25 1/43

KSA 2.894 4/22

KSA 4 04/25

KSA 4.303 01/29

KSA 5 4/49

QATAR 4.50 1/22QATAR 3.375 03/14/2024

QATAR 4 03/14/2029

QATAR 4.817 03/14/2049

KUWIB 2.75 3/22

KUWIB 3.5 3/27

2

2.5

3

3.5

4

4.5

5

5.5

6

3yr 5yr 10yr 30yr

Abu Dhabi z-spread and yield curve (YTD

change)

34Note: YTD change: 31st December2018 to 31st March 2019, , Source: Bloomberg, ADCB

The z-spread is our preferred measure for analyzing the relative value of a bond. The z-spread is the additional yield one gets after having calculated an equilibrium price based on the effective cash flows and comparing that price with the market price. A higher spread implies that the bond is trading at a discount and negative spread implies that the bond is trading at a premium. Note that the recent general upward shift in the yield curve indicates that bonds have sold off across all maturities. Thus yield curve analysis allows us to see which maturities have suffered more and which have suffered less.

0

50

100

150

200

250

300

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

DUGB7.75

10/20

DUGB5.59 6/21

DUGB6.45

05/22

DUGB3.87501/23

DUGB3.89

03/25

DUGB 504/29

DUGB5.25 1/43

Z-sp

read

(b

ps)

Yiel

d

31-Dec-18(YC) 31-Mar-19 (YC) 31-Dec-18 (Z-spread) 31-Mar-19 (Z-spread)

Dubai z-spread and yield curve (YTD

change)

35: Note: YTD change: 31st December2018 to 31st March 2019, , Source: Bloomberg, ADCB


0

50

100

150

200

250

300

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

DUGB7.75

10/20

DUGB5.59 6/21

DUGB6.45

05/22

DUGB3.87501/23

DUGB3.89

03/25

DUGB 504/29

DUGB5.25 1/43

Z-sp

read

(b

ps)

Yiel

d


Saudi Arabia z-spread and yield curve (YTD

change)

36: Note: YTD change: 31st December2018 to 31st March 2019, Source: Bloomberg, ADCB


100

120

140

160

180

200

220

240

260

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

Z-sp

read

(b

ps)

Yiel

d


Kuwait z-spread and yield curve (YTD

change)



30

40

50

60

70

80

90

100

110

120

1

1.5

2

2.5

3

3.5

4

KUWIB 2.75 3/22 KUWIB 3.5 3/27

Z-sp

read

(b

ps)

Yiel

d


Bahrain z-spread and yield curve (YTD

change)

38: Note: YTD change: 31st December2018 to 31st March 2019,, S= International Sukuk Source: Bloomberg, ADCB


100

150

200

250

300

350

400

450

500

550

1

2

3

4

5

6

7

8

9

Z-sp

read

(b

ps)

Yiel

d


Oman z-spread and yield curve (YTD

change)



0

100

200

300

400

500

600

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

OMAN3.6256/21

OMAN3.8753/22

OMAN4.1251/23^

OMAN4.756/26

OMAN5.3753/27

OMAN5.6251/28^

OMAN6.5 3/47

OMAN6.75

1/48^

Z-sp

read

(b

ps)

Yiel

d


GCC corporate top performers (spread

performance in 1Q19)

40

Note : YTD change: 31st Dec 2018 to 31st Mar 2019, All bonds are dollar denominated and maturing in 2020 or above “PERP” refers to Perpetual, “Float” refers to floating rate bond Source: Bloomberg, ADCB

The z-spread is our preferred measure for analyzing the relative value of a bond. The z-spread is the additional yield one gets after having calculated an equilibrium price based on the effective cash flows and comparing that price with the market price. A higher spread implies that the bond is trading at a discount and negative spread implies that the bond is trading at a premium.

-90.1-90.1-91.7-94.7

-104.3-108.5-108.5-109.6-110.8-110.8-112.9-112.9

-120.5-122

-131-145-145-147-147

-154-169

-180-180

-193-241

-300-250-200-150-100-500

OILGAS 7 ½ 10/25/27 OILGAS 7 ½ 10/25/27 KWIPKK 4 ½ 02/23/27

ERESQD 4 ⅞ 04/05/22REITDU 5 ⅛ 12/12/22OILGAS 7 ⅝ 11/07/24OILGAS 7 ⅝ 11/07/24 CBIUH 6 ½ PERP

OILGAS 8 ⅜ 11/07/28OILGAS 8 ⅜ 11/07/28

DUBAEE 5 ¼ 11/15/21 DUBAEE 5 ¼ 11/15/21

KWIPKK 9 ⅜ 07/15/20 MERAAS 5.112 05/31/22

DAMACR 6 ⅝ 04/18/23 DUBAEE 4 08/01/20 DUBAEE 4 08/01/20

DUBAEE 4 ½ 08/01/22 DUBAEE 4 ½ 08/01/22

DARALA 6 ⅞ 04/10/22ERESQD 4 ⅜ 05/18/21

SHLFDI 8 ¼ 02/15/25 SHLFDI 8 ¼ 02/15/25

DAMACR 6 ¼ 04/20/22BDRILL 3 ⅞ 05/23/23

Performance from 31 Dec 2018 to 31 Mar 2019

GCC corporate bottom performers (spread

performance in 1Q19)

41



690144

10955

433232292827252521171616131212

875511

0100200300400500600700800

EAPART 6 ⅞ 09/28/20 EBIUH Float 03/31/24 TILSUK 6 ½ 11/12/23 LNKLFI 9 12/17/23

NMCLN 1 ⅞ 04/30/25NBOBOM 7 ⅞ PERP

ADCBUH Float 02/03/20 MASQUH Float 11/13/20 BKDBOM 6.85 PERP

ADIBUH 7 ⅛ PERP RASGAS 5.298 09/30/20 RASGAS 5.298 09/30/20 JOMAR 9.85 11/15/23 ADFGFC 6 ¾ 11/01/20 ADWA 3.925 07/28/20 ADWA 3.925 07/28/20 MUBAUH 3.386 12/19/21 QTELQD 4 ½ 01/31/43 QTELQD 4 ½ 01/31/43 DIFCAE 4.325 11/12/24 BGBKKK 7 ¼ PERP

DEWAAE 7 ⅜ 10/21/20DEWAAE 7 ⅜ 10/21/20

ETIAIR 2.785 12/01/24 ETIAIR 2.785 12/01/24


GCC Investment Grade corporates (BBB- rated

and above only) spread performance in 1Q19

42



-59-60-60-61-61-62-63-65-66-67-69

-74-74-74-77-80-80

-85-92

-121

-140-120-100-80-60-40-200

EBIUH 5.16 10/03/33 INTLWT 5.95 12/15/39 INTLWT 5.95 12/15/39

EBIUH 5 08/12/33 EBIUH 3 ¼ 11/14/22

QNBK Float 08/11/21 COMQAT 5 05/24/23

EBIUH Float 04/05/28EBIUH 4 ⅛ 07/06/32

EBIUH 4.235 08/09/32 COMQAT 3 ¼ 06/13/21

EBIUH 4.9 05/23/28 EBIUH 4.56 04/10/28 EBIUH 4 ½ 03/16/27

EBIUH 4.18 10/18/27 TABRED 5 ½ 10/31/25

ABQKQD 3 ½ 02/22/22 KWIPKK 5 03/15/23

KWIPKK 4 ½ 02/23/27KWIPKK 9 ⅜ 07/15/20

Top performers..

Z-spread (bp)

25

25

16

16

12

12

5

5

1

0

0

-100102030

RASGAS 5.298 09/30/20

RASGAS 5.298 09/30/20

ADWA 3.925 07/28/20

ADWA 3.925 07/28/20

QTELQD 4 ½ 01/31/43

QTELQD 4 ½ 01/31/43

DEWAAE 7 ⅜ 10/21/20

DEWAAE 7 ⅜ 10/21/20

EBIUH Float 10/12/20

QGTS 6.267 12/31/33

QGTS 6.267 12/31/33

..bottom performers

Z-spread (bp)

GCC High Yield corporates (rated BB+ and

below only) spread performance in 1Q19

43



10927

-9-11-14-14

-26-50-51-51-55-55

-67-70-70

-75-75-76-76

-84-84-86-86-86-89

-145-145-147-147

-154-180-180

-200-150-100-50050100150

TILSUK 6 ½ 11/12/23ADIBUH 7 ⅛ PERP

NMCHSU 5.95 11/21/23NBOBOM 5 ⅝ 09/25/23

TPZMAR 9 ⅛ 07/26/22TPZMAR 9 ⅛ 07/26/22

BKMBOM 4 ⅞ 03/14/23 BKMBOM 3 ¾ 05/03/21 MAZOON 5.2 11/08/27 MAZOON 5.2 11/08/27

OTELOM 6 ⅝ 04/24/28OTELOM 6 ⅝ 04/24/28 ALAHKW 7 ¼ PERP

DUBAEE 5 08/01/24 DUBAEE 5 08/01/24

OTELOM 5 ⅝ 10/24/23OTELOM 5 ⅝ 10/24/23

OMGRID 5.196 05/16/27 OMGRID 5.196 05/16/27 OMGRID 3.958 05/07/25 OMGRID 3.958 05/07/25

BBK 3 ½ 03/24/20 DUBAEE 5 ¾ 11/15/23 DUBAEE 5 ¾ 11/15/23

DARALA 6 ⅞ 03/21/23 DUBAEE 4 08/01/20 DUBAEE 4 08/01/20

DUBAEE 4 ½ 08/01/22 DUBAEE 4 ½ 08/01/22

DARALA 6 ⅞ 04/10/22 SHLFDI 8 ¼ 02/15/25 SHLFDI 8 ¼ 02/15/25


UAE financials (spread performance in 1Q19)

44



-41

-41

-41

-41

-41

-41

-43

-44

-44

-45

-51

-51

-55

-59

-59

-60

-68

-71

-75

-110

-150-100-500

HSBC Float 03/08/20

HSBC Float 07/28/20

HSBC 3.08 09/20/21

HSBC Float 10/04/20

HSBC Float 02/04/20

HSBC 2.84 12/20/21

HSBC 3.015 07/20/22

HSBC 3.0675…

DIBUH 3.664…

HSBC 3.53 04/30/23

HSBC Float 08/08/20

HSBC Float 06/03/21

HSBC Float 04/06/23

HSBC Float 08/14/21

BOSUH 4.23 03/07/22

ALHILA 5 ½ PERP

HSBC Float 05/29/23

BOSUH 3.374…

NOORBK 6 ¼ PERP

CBIUH 6 ½ PERP

Top performers

29

27

-1

-2

-5

-5

-5

-6

-6

-6

-7

-8

-8

-8

-9

-20-10010203040

MASQUH Float 11/13/20

ADIBUH 7 ⅛ PERP

MASQUH 3.61 03/09/20


EIBUH 3.542 05/31/21







DIBUH 6 ¾ PERP


DIBUH 2.921 06/03/20


Bottom performers

45

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