DUBAI (Reuters) – Royal Bank of Scotland (RBS) expects up to $10 billion in Gulf bond sales in the fourth quarter, driven by the region’s refinancing needs, the bank’s chief executive for the Middle East said on Sunday.
The bond market in the Gulf remained shut for months following indebted Dubai World’s debt standstill announcement in November, but some regional issuers – mostly state-linked entities – have managed to tap the market in 2010.
“Based on the pipeline and the region’s refinancing needs, we are fairly optimistic that Q4 will represent the best quarter of 2010…it’s not unreasonable to expect $7 billion to $10 billion,” Simon Penney, RBS’s regional head, told Reuters.
“For well rated borrowers in good, solid industries, we’re confident that demand is there.”
Penney said issuers would range from governments and state-owned entities to banks as well as other pure corporates, and that he is confident RBS is on a “fair chunk of deals” that will come from the region in the final quarter.
RBS was one of the lead managers on the $3.5 billion issue from Qatari Diar, the real estate unit of the state’s sovereign wealth fund, the largest deal from the region this year which attracted an order book of over $20 billion.
The bank also helped manage the $1 bln sale from state utility Dubai Electricity and Water Authority (Dewa) in April, carrying a coupon of 8.5 percent and the first issue from a Dubai entity since the emirate’s debt troubles came to light in November.
RBS is one of four U.K. banks that is part of a seven-member committee that is leading the debt restructuring talks between state conglomerate Dubai World and its creditors. The firm recently received near-unanimous agreement for its debt plan.
Speculation is growing about a potential sovereign bond sale from Abu Dhabi or Dubai in 2010. Both emirates have held meetings with international investors in recent months, with Abu Dhabi’s debt management office (DMO) most recently on the road in Europe, just last week.
An official at the DMO told Reuters Abu Dhabi plans no immediate bond issues following the “non-deal roadshows” in several European cities.
Similarly, Dubai officials have also sought to play down a sovereign issue from the debt-ridden emirate but a packed repayment schedule in the next two years could entice the emirate to issue bonds.