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HSBC expects big business on Gulf bonds

UK-based bank sees ‘multiple dozens’ of debt-sale mandates amid growing local demand

HSBC Holdings, the Gulf’s top bond underwriter so far this year, has “multiple dozens” of
debt-sale mandates as borrowers take advantage of local demand, an
official for the UK-based bank said.

Companies
and governments in the Gulf Cooperation Council, which includes Saudi
Arabia and the UAE, will continue to sell bonds as
“there’s still plenty of cash around” in the region, Georges Elhedery,
head of global markets for the Middle East and North Africa at HSBC,
said in an interview.

“If the year
is good, issuers will have time to go to the market,” he said. “In
terms of hard mandates, we’ve got at least a dozen or two for those
issuers who want to go to the market now. For those who want to come
immediately to the market, we’re probably talking about half a dozen.”

Gulf
bond sales have more than doubled so far this year from a year earlier
to $14.7bn, a record for the period based on data compiled by
Bloomberg going back to 1999.

London-based HSBC has arranged $7.5bn in debt sales, knocking Deutsche Bank off the top spot as
lead underwriter in the first quarter, a position the German lender had
held for the period since 2009.

In January,
the bank was the sole arranger for the Saudi General Authority of Civil
Aviation’s $4bn sukuk, or Islamic bond, the region’s biggest sale
last quarter.

It also managed Saudi Electricity Co’s $1.75bn
Islamic bond sale with Deutsche Bank last month, the world’s biggest
oil exporter’s first dollar sukuk sale since February 2010.

“We’re
hoping that there will be another Saudi dollar issuance this year,”
Elhedery said. “We expect Saudi banks to come to the market. Saudi banks
are very liquid in riyals, but they do require dollars.”

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