JPMorgan sees Gulf bond sales slipping as rates, volatility rise

DUBAI (Agencies): JPMorgan Chase & Co., one of the biggest arrangers of Gulf bond deals, expects sales to slip in 2019 from last year’s $78 billion, as issuers turn cautious amid rising interest rates and market volatility.

In the past, when there has been uncertainty either “in rates or in spreads, regional issuers tended to become more careful and price sensitive,” Hani Deaibes, the US bank’s regional head of debt capital markets, said in a phone interview from Dubai. “Most of our clients have multiple funding options and will consider other alternatives” if bonds turn too expensive, he said.

Borrowers from the six-nation GCC, which include the two biggest Arab economies of Saudi Arabia and the UAE, primarily sell bonds in dollars and two further interest rate hikes forecast in the US this year will add to costs.