A brightening global economic outlook and a shift in investor appetite towards emerging market debt helped to spur US$32.6 billion (Dh119.74bn) of bond sales in the Persian Gulf this year.

That was down from the $42.9bn borrowed by companies and governments from investors last year, according to Bloomberg data. But it was still more than double the $15bn of bond sales in 2008 during the worst stretch of the financial crisis.
The top sellers of debt in the region this year were the Qatar Investment Authority, which sold $3.5bn of bonds in July, and the Dubai Electricity and Water Authority, which issued $3bn in April and October. Qatar Telecom and Abu Dhabi's International Petroleum Investment Company followed with $2.75bn and $2.5bn of bonds, respectively.
Bond sales are an important barometer of economic health because they signal how easily corporations can borrow to finance their operations. They also serve as an indicator of investors' confidence in the stability of government finances.
""I would expect 2011 to be at least as strong as 2010 in terms of new issuance,"" said Michael Grifferty, the president of the Gulf Bond and Sukuk Association, an industry body. ""Globally, emerging market debt has increased, driven by low dollar interest rates and the faster recovery of developing economies. That trend should sustain for as long as U.S. rates remain low, which seems a good bet to last a while longer.""
Indeed, low interest rates in the U.S., coupled with the Federal Reserve's decision to pump an additional $600bn into the economy through a second round of so-called quantitative easing, meant that investors in the West were flush with cash this year. With returns on debt investments in the developed world stagnant, much of that fresh cash went to emerging markets, including the Middle East.
This year's bond sales in the Persian Gulf came against a backdrop of relatively healthy bond issuance globally. About $3.37 trillion of bonds were sold this year, according to Bloomberg data, a 21 per cent decline compared with last year, but still more than in 2008.
Whether next year is a bumper one for Persian Gulf bonds depends on several factors, including whether international investor appetite for emerging market debt remains strong and the sustenance of a gradual recovery from the worst global downturn in a generation. The IMF currently expects emerging economies to grow 6.4 percent next year. That compares with just 2.2 percent growth in the developed world.
(Source: thenational.ae)