CGI Gulf Insights of the Week (162)

ByCGI Gulf Insights of the Week
Monday, 26 August 2019
Published inAugust 2019

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Egypt
Risk Indicator - DB5d
Risk Level - High

Ratings Trend - Stable

Egypt's prime location as a base for exports to the Middle East, Asia and Africa creates a potential for long-term economic growth, as does its large population of almost 100m. Economic reforms enacted since late 2016 provide an opportunity to resolve deep-seated weaknesses and create the basis for sustainable high rates of growth over the medium term.

Market Overview

Bankers head to Saudi Arabia to compete for the world's biggest IPO
Global banks will this week start making their case on why they should be hired for what’s set to be the world’s biggest initial public offering, according to people with knowledge of the matter. Dealmakers representing advisory firms from around the world will from Tuesday travel to Saudi Aramco’s headquarters in Dhahran in the kingdom’s Eastern Province to compete for a role in the offering that’s planned for as early as 2020, the people said, asking not to be identified as the information is private. Aramco, which posted a profit of $46.9 billion in the first six months, has revived its much-anticipated share sale after shelving plans to focus on its acquisition of a 70% stake in Saudi Basic Industries Corp. Lazard Ltd and Moelis & Co have restarted preparatory work and are expected to play a key role in the listing, including in the selection of underwriters and venues. The company has invited more than 20 advisory firms from the US, Europe, and Asia to compete, including some of the world’s biggest underwriters as well as a number of smaller banks, a person familiar with the matter said last week.

GCC bond issuance surges to record $40bn in Q2 2019
GCC bond issuance surged to a record $40 billion in the second quarter of 2019, in spite of lower yields, breaking the high of $32bn in the previous quarter, according to the latest report from the National Bank of Kuwait (NBK). This lifted the total outstanding debt, foreign and domestic, to $501bn at the end of Q2, from $478bn in Q1. The report said: “Issuance was dominated by sovereigns and quasi-sovereigns, with funding for strategic investments by sovereign wealth funds and state-owned enterprises a strong driver. In addition, a large volume of maturing debt has likely helped ramp-up new issuance.” Some $43bn in maturing debt is scheduled for 2019, of which $28bn had matured as of early-August. The bulk of issuance in Q2 came from Saudi Arabia with $26.8bn. This included a jumbo $12bn from Saudi Aramco as it looks to foster relationships with international investors ahead of its IPO scheduled for 2021 and in light of its plans to purchase a stake in SABIC. Also of note, Oman tapped international debt markets for the first time this year in July, with a successful $3bn issue despite concerns over its fiscal position.

Chinese payments firm eyes growth amid Gulf e-commerce boom
iPayLinks, a China-based provider of cross-border payment services, has said it is aiming to build up a one-stop payment solution for the Middle East. The company's entry into the regional fintech space comes as the Middle East is fast establishing itself as an emerging cross-border e-commerce market due to its ballooning smartphone penetration and growing consumer purchasing power. iPayLinks. which already has a licensed branch in Dubai, as well as a SAGIA licensed subsidiary in Riyadh, said in a statement that it is aiming to expand its Middle East cross-border business. MENA’s online sales have continued to register impressive growth with the region’s trade volume expected to reach $26 billion by 2020. "Business-to-consumer is a rapidly growing trend for e-payments among consumers in the GCC region. We also envisage that business-to-business will follow suit as more companies warm up to the idea of moving most of their payments options online," said Ben Wang, regional director, iPayLinks. He said iPayLinks also aims to build a cross-border e-Wallet for enterprises and marketplace merchants. This, according to iPayLinks, will help streamline the process of pay in and out by vendors in the region which will, in turn, boost revenues and avoid extra charges.

Oman cement giant secures $50m Islamic financing for expansion
Bank Nizwa, the Oman-based Islamic lender, has signed an OR19.5 million ($50.6 million) agreement for Shari’a-compliant financing facilities with Raysut Cement Company. The facilities consist of long-term financing of OR12 million, working capital of OR3 million to Raysut Cement Company at Salalah and OR4.5 million for construction and expansion of Sohar Cement Factory. The agreement is part of Bank Nizwa’s commitment to contribute to Oman’s economic diversification strategy and feed into private and public sectors’ growth with a focus on the manufacturing industry. Raysut Cement Company is based in Salalah and holds a 40 percent share in the Omani cement market. Sheikh Abdul Hafidh Salim Al Barami, vice chairman of Raysut, said: “Bank Nizwa and Raysut Cement Company are two Press Release powerhouses in their respective sectors. We are confident this collaboration will positively impact our businesses. "The secured Shari’a-compliant banking facilities will set us for stronger and rapid growth and help us solidify our position as the largest cement manufacturer in the sultanate.”

Islamic New Year 2019 holidays announced for UAE public and private sector
UAE public and private sector employees will get a holiday for the Hijri New Year (Islamic New Year), the Federal Authority for Human Resources (FAHR) and the Ministry of Human Resources and Emiratisation (MOHRE) has announced. But whether that means a three-day weekend for most will depend on a moon-sighting later this week. A tweet from the MOHRE said: “The Ministry of Human Resources and Emiratisation announces the 1st of Muharram 1441, an official holiday on the occasion of #Hijri_New_Year. This will be a paid holiday for all government entities, establishments, and private companies in the #UAE.” Muharram 1, 1441 falls on Saturday (August 31) or Sunday (September 1), leading many to anticipate a holiday on Sunday — which will likely give a long weekend to UAE residents. Earlier this year the UAE Cabinet announced that private-sector employees will benefit from the same public holidays as the government sector.

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