Market Insights & Strategy

GCC Fixed Income

Chart Book

2019 - 9M Review
14th October 2019

Rakesh Sahu / Chavan Bhogaita

Foreword

Welcome to our periodic chart book for the GCC fixed income market. The idea is very simple – to give those of you who follow this market a
quick snapshot of some of the key points in terms of the following:

 Overview of the GCC fixed income market

 GCC fixed income market performance in the first nine months of 2019

 Primary Market issuance in 9M 2019

 Market developments and relative value analysis

 Secondary Market performance of key instruments (snapshot from 31st December 2018 to 11th October 2019)

We have deliberately made the report text-light in an attempt to make it easier to digest. Hopefully you will find it both interesting and useful.

If you have any feedback on the report, or indeed would like to discuss any of the points highlighted, please do contact us.

Chavan Bhogaita Rakesh Sahu

Managing Director & Head of Market Insights & Strategy Director, Market Insights & Strategy
Global Markets, FAB Global Markets, FAB
Chavan.Bhogaita@bankfab.com Rakesh.KumarSahu@bankfab.com
+971 2 6110 127 +91 22 333 11138

Please click here to view our recent publications on MENA and Global Markets

2
A record year in the making for GCC primary markets with 2019 nine-month
issuance at par with the all time high seen in 2017
Total Eurobond issuance* in hard currency ($/€/£/A$)

90 Total issuance Conventional bond Sukuk

US$ billion

83.8 82.6
78.6
80 22.5
With a decent new issue pipeline in the making, we expect to see
22.2 15.3
around $7-10bn of further new bond issues from the region going in 69.0
70 to the close of 2019. This should take the total new issues from the
GCC this year to north of $90bn, an all time high. 14.4
67.3
60
61.3
56.4
54.6
50

40
32.3 32.6
29.8
30 25.6 25.9 14.1 13.7
11.4 22.6
2.4 4.8
20 23.2 7.6
21.1
18.2 18.4 18.9
15.0
10

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 9M 2019*

25% 28% 21% 11% 10% 9% 58% 60% 47% 47%

Sovereign issuance as % of total GCC issue

Note: For the above analysis we have considered major hard currency ($/€/£/A$) bonds and sukuk issuances from the six nations in the GCC as at 4-Oct-
2019. This includes both fixed and floating rate issuances of $100m or above and maturity of 1-year or above. The figures are indicative figures only as the
analysis is limited by the availability of information from a third party database; Source: Bloomberg; FAB 3
 GCC Eurobond market now represents a significant part of EM and is
firmly on the radar of investors
EM/GCC Sovereign Eurobond issuance EM/GCC total Eurobond issuance EM/GCC outstanding Eurobonds
9M 2019 9M 2019

GCC EM Sovs GCC EM total GCC EM total

Sovs 29% total 15% 11%
$83bn* $539bn* $399bn* $3,752bn*
$39bn* $132bn*

Top 15 Sovereign issuers from EM in 2019 Top 15 Corporate issuers from EM in 2019 Top 15 Financial issuers from EM in 2019
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

QATAR 12.0 PEMEX 14.8 ICBCAS 13.5

KSA 10.9 ARAMCO 12.0 BCHINA 7.4
ADGB 10.0 PETBRA 6.4 AGRBK 6.9
TURKEY 8.7 TENCNT 6.0 CCB 6.8
MEX 8.4 AMXLMM 3.4 SDBC 4.9
EGYPT 6.3 CDEL 3.3 BOCOM 4.8
ROMANI 5.6 EVERRE 3.2 FABUH 4.2
SOAF 5.0 COGARD 3.0 KDB 4.0
SRILAN 4.4 SUNAC 2.8 QNBK 3.0
ECUA 4.1 SUZANO 2.7 EXIMCH 3.0
RUSSIA 4.0 GZRFPR 2.7 EIBKOR 2.8
INDON 3.6 HRINTH 2.4 EBIUH 2.7
ISRAEL 3.4 PHILIP 2.3 BCLMHK 2.2
GHANA 3.0 HAOHUA 2.3 POWFIN 1.8
OMAN 3.0 Figures in US$ bn CNSHAN 2.1 Figures in US$ bn CHINAM 1.7 Figures in US$ bn

Note: For the above analysis we have considered major hard currency ($/€/£/A$) bonds and sukuk issuances from the six nations in the GCC and the
broader Emerging Markets as at 4-Oct-2019. This includes both fixed and floating rate issuances of $100m or above and maturity of 1-year or above.
* The figures are indicative figures only as the analysis is limited by the availability of information from a third party database; Source: Bloomberg; FAB 4
 In the week of 23-27 Sept saw a record $40bn of EM new issues, including
$16bn from the GCC which is a fifth of GCC’s YTD issuance

Busiest Sept. in EM /GCC primary market The record supply instigates some investor fatigue, but we see appetite returning

20% or $19b of EM deals in September were The combination of low rates + low credit spreads offer opportune time for Issuers
printed from the GCC
The rush to issue was underpinned by issuers’ effort to take advantage of market conditions – i.e. to
Strong demand helped issuers to pay frontload the untapped liquidity available after the summer slowdown at lower rates
100

US$ billion
minimum new issue premium
90 The record supply however instigated some investor fatigue; some of the deals in the following week
80 received underwhelming response, as investors became cautious of pricing and performance
70
74
60
50 We however continue to see appetite for GCC/EM deals, albeit for high quality credits and pockets of
58 56 high-yield borrowers with established track record. We based our thoughts on the following grounds:
52
58 40
60 30 (1) EM funds are still sitting on cash to put to work;
47
39 20
(2) Credit quality will be in focus amid rising concerns on global growth and political uncertainties,
17 17 13 19 10
10 3 3 2 11 combination of robust credit quality and incremental yield enhance investor appetite for GCC risk;
0
Jan Feb Mar Apr May Jun Jul Aug Sep (3) The hunt for yield should provide opportunities for high yield issuers with established curve
GCC issues EM issues (ex GCC)
3.30 2.00
Major Sept deals of GCC 3.10 1.90
Abu Dhabi priced a 10Y Abu Dhabi priced a
2027 bond @ T+85bps and 10Y 2029 bond @ 1.80
Deal Date Orderbook 2.90
pays coupon of 3.125% T+85bps and pays 1.70
EMAAR $500m 10Y Sukuk 10-Sep 4.9x 2.70 coupon of 2.50%
1.60
BOSUH $600m 5Y bond 11-Sep 3.1x 2.50 1.50
ABQKQD $500m 5Y bond 17-Sep 3.4x 2.30 1.40
WARBAB $500m 5Y sukuk 17-Sep 6.3x 2.10 1.30
ADGB $10b 3-tranche bond 23-Sep 2.5x 1.20
1.90
FUJAIR $350m AT1 NC5 bond 24-Sep 4.3x 1.10
1.70
A combination of low benchmark 1.00
DPWDU $1b 2-tranche Sukuk & bond 24-Sep 2.9x rate and credit spread provide better
1.50 0.90
BHRAIN $2b 2-tranche Sukuk & bond 24-Sep 2.3x pricing opportunity for issuers
1.30 0.80
SAMBA $1b 5Y bond 25-Sep 3.3x
ISDB $1.5b 5Y Sukuk 25-Sep NA
TAQAUH $500m 30Y bond 26-Sep 6.0x US 10Y Treasury Yield in % (LHS) GCC IG bonds credit spred over treasuryin % points (RHS)
Source: Bloomberg; FAB 5
 GCC fixed income has delivered the best return for bond investors this year
The major risk event of September, the drone attack on Aramco’s oil facilities that temporarily knocked out half of Saudi oil production
and the subsequent one notch rating downgrade of KSA by Fitch Ratings (from A+ to A), citing increased risk of geopolitics, resulted in
muted spread widening. While yield/spreads did widen initially on some knee jerk reaction, we saw meaningful real money buying at any
dip, at one point pushing the yields below the level just seen before the attack. Yields however increased last week, moving inline with
broader emerging markets.
Notwithstanding the gravity of the situation, and the associated geopolitical risks, the price movements in our opinion demonstrate that
institutional investors are now more familiar with the dynamics of GCC region and take a cognisant view on the situation by paying
attention to credit fundamentals and the associated risk-reward. The successful bond issuance from Saudi bank SAMBA and high beta
sovereign29%
Bahrain, just a week after the attack, also demonstrates investor conviction towards this region.
11%

KSA/Aramco yield movement Total Return of GCC/EM bond index

3.1 3.1 Yields at one +14.0% GCC US$ Inv. Grade (A+) GCC US$ IG + HY (A)

+13.8%
+13.2%

+13.3%
3.0 3.0 point fall below
+12.0% EM Asia US$ IG (A-) EM IG US$ (BBB+)
the levels seen

+11.4%
2.9 2.9

+11.0%
before the +10.0% EM Asia US$ (BBB+) EM Hard CCY Aggregate (BBB-)

+10.1%
2.8 2.8 attack Credit rating shown are avg. rating of the bond index
2.7 2.7 +8.0%
ARAMCO 2.875
2.6 2.6 04/16/2024

+6.5%
+6.0%

+6.2%

+5.5%
2.5 2.5 ARAMCO 3.5

+5.1%

+4.9%
+4.9%
Drone Fitch

+4.5%
+4.5%
04/16/2029 +4.0%

+4.3%
+4.2%

+4.2%
+4.1%
+4.0%

+3.7%
+3.7%

+3.6%
2.4 attack downgrade 2.4

+3.5%
+3.2%
on 14th on 30th KSA 4.375
2.3 2.3 04/16/29 +2.0%
KSA 4.0 +0.0%
04/17/25 Q1 return Q2 return Q3 return 9M return*

UAE Aggregate Yield KSA Agg. Yield Qatar Agg. Yield Kuwait Agg. Yield Oman Agg. Yield Bahrain Agg. Yield
Yield change: -146bps 4.75 Yield change: -143bps Yield change: -129bps 4.40 Yield change: -143bps 4.30 Yield change: -162bps Yield change: -155bps
4.60 4.10 7.40 6.40
Total Return: +11.2% 4.50 Total Return: +16.6% Total Return: +13.7% 4.20 Total Return: +9.1% Total Return: +14.5% 7.20
Total Return: +13.8%
4.40 3.90 6.20
4.25 4.20 4.00 7.00 6.00
3.70 6.80
4.00 3.80 5.80
4.00 3.50 6.60
3.80 3.60 5.60
3.75 3.30 6.40
3.60 3.40 5.40
3.10 6.20
3.50 3.40 6.00 5.20
3.20 2.90
3.25 3.20 5.80 5.00
3.00 3.00 2.70 4.80
5.60
3.00 2.80 2.80 2.50 4.60
5.40
2.75 2.60 2.60 2.30 5.20 4.40
Note: 9M return through 4th Oct 2019; Please refer appendix for the index details; Source: Bloomberg; FAB 6
 GCC fixed income – Market composition by country

Total US$ value of hard currency ($/€/£/A$) bonds and sukuk outstanding: $399 bn*

KSA: $106.0 bn UAE: $143.0 bn

Sovereign $62.8 59% Sovereign $34.4 24%

GREs $25.6 24% GREs $53.3 37%

27% 36%
Financials $16.7 16% $106.0b $143.0b Financials $45.3 32%

Corporates $0.9 1% Corporates $10.0 7%

19%
$74.5b
QATAR: $74.5 bn 4% KUWAIT: $17.1bn
6% $17.1b
8%
Sovereign $45.4 61% $25.8b Sovereign $8.0 47%
$32.8b
GREs $7.6 10% GREs $0.0 0%

Financials $20.5 28% Financials $4.8 28%

Corporates $1.0 1% Corporates $4.3 25%

OMAN: $32.8 bn BAHRAIN: $25.8 bn

Sovereign $26.5 81% Sovereign $20.5 80%

GREs $3.5 11% GREs $3.1 12%

FIs $2.7 8% FIs $2.2 8%

Corporates $0.1 0% Corporates $0.0 0%

Notes: * For the above analysis we have considered major hard currency ($/€/£/A$) bonds and sukuk issuances from the six nations in the GCC. This includes both fixed and floating rate issuances of
$100m or above and maturity of 1-year or above; Bond value shown are aggregate outstanding value as at 4th Oct 2019; The figures are indicative figures only as the analysis is limited by the availability
of information from a third party database; GRE stands for Government Related Entities; Source: Bloomberg/FAB 7
 GCC fixed income – Market composition by issuer type

Total US$ value of hard currency ($/€/£/A$) bonds and sukuk outstanding: $399 bn*

KSA
32%
Oman
13%
Sov GREs UAE

$197.6 bn KSA $93.2 bn

57%

28%
UAE 49.5%
18%
Qatar $197.6 b
23%
23.3%
$93.2 b

23.1% 4.1%
$92.1 b $16.3 b

KSA
18%
Fins UAE
Kuwait
Corps UAE
49% 61%
$92.1 bn 26% $16.3 bn
Qatar
22%

Notes: * For the above analysis we have considered major hard currency ($/€/£/A$) bonds and sukuk issuances from the six nations in the GCC. This includes both fixed and floating rate issuances of
$100m or above and maturity of 1-year or above; Bond value shown are aggregate outstanding value as at 4th Oct 2019; The figures are indicative figures only as the analysis is limited by the availability
of information from a third party database; GRE stands for Government Related Entities; Source: Bloomberg/FAB 8
 GCC fixed income – Market overview of credit quality*

Total US$ value of hard currency ($/€/£/A$) bonds and sukuk outstanding: $399bn **
OMAN: $32.8 bn

UAE: 143.0 bn
AA
AA
$19b $15b 27%
$28b $47b BBB 22.1%
5% 4% BBB
range
7% 12% range
18%
BB range
BB range
99.5%
$37b $64b 19.6%
99.5% 9% 16%
AA
%
$33b
8%
AA-
BBB range
BAHRAIN: $25.8 bn

KSA: $106.0 bn
A- A+ $11b
$30b 3% A
B range A
7% 69.7%
85.8%
87% A 82%
KUWAIT: $17.1 bn

QATAR: $74.5 bn
A-
A-
12%
AA
$115b 14.2%
AA
47% 29% A AA-
48.6% A+ AA-
21% 63%
14.9% 63.7%

Notes: ** For the above analysis we have considered major hard currency ($/€/£/A$) bonds and sukuk issuances
from the six nations in the GCC. This includes both fixed and floating rate issuances of $100m or above and maturity
of 1-year or above; Bond value shown are aggregate outstanding value as at 4th Oct 2019; The figures are indicative
figures only as the analysis is limited by the availability of information from a third party database;
* We have considered the credit ratings of issuers or guarantors of the bonds; Credit rating shown are composite credit rating (please refer to the appendix for details); KSA based Supranationals – Islamic
Development Bank (AAA), Apicorp (AA-) & Islamic Corp. for the Development of the Private Sector (A+) – have been included in the analysis; Source: Bloomberg/FAB
9
 GCC sovereign curves
7.50 27.4Y
Yield in %

28.3Y
7.00
27.9Y
6.50 9.8Y
6.00 7.4Y
6.7Y
5.50 9.9Y
5.3Y
5.00

4.50 5.4Y 7.5Y

3.3Y
4.00 28Y
29.5Y 30.3Y
2.7Y
3.80

3.60 29.4Y

3.40
9.5Y 30Y
3.20 28Y
10.5Y
3.00 9.5Y

7.5Y
2.80 10.7Y
5.4Y 7Y
2.60 3.3Y
2.6Y 5.5Y
3.4Y 6.6Y 10Y
2.40
2.5Y 6.6Y
2.20 Kuwait curve
7.4Y
5Y
2.00
2.4Y 3Y 3.5Y
3.3Y

1.80

10.0
10.5
10.7

27.0
27.4
27.9
28.0
28.0
28.3
28.5
29.4
29.5
30.0
30.3
5.4

9.9
2.4
2.5
2.6
2.7
3.0
3.3
3.3
3.3
3.4
3.5

4.6
5.0
5.3
5.4

5.5

6.6
6.6
6.7
7.0
7.4
7.4
7.5
7.5

9.5
9.5
9.8
~3-year tenor ~5-year tenor ~7-year tenor ~10-year tenor ~30-year tenor
Notes: Curves as on 11-Oct-2019; “S” indicates sukuk; Source: Bloomberg/FAB 10
 Relative Value: GCC, Asia & Broader Emerging Markets

Relative Value of various EM/GCC bond index

Bubble size indicates the average credit rating of the index. Bigger the bubble better the credit quality

4.75%
EM Hard CCY Aggregate;
4.59%; 9.4Y BBB-
4.50%

EM Asia US$ Aggregate;

4.25% BBB+
4.25%; 6.2Y

4.00%
Yield

3.75%

3.50%
EM IG US$;
3.26%; 10.3Y
BBB+ A GCC US$ IG & HY;
3.25%
3.29%; 10.5Y
GCC US$ IG; A-
3.00% A+ EM Asia US$ IG;
2.97%; 11.3Y
3.07%; 7.2Y
2.75%

2.50%
75 100 125 150 175 200 225 250 275 300 325 350
Option adjusted spread (OAS) in basis points
Note: Data as at 11-Oct-2019; Please refer appendix for the index details; Source: Bloomberg/FAB
11
 GCC inv. grade sovereign bonds vs EM peers: 7y to 10y
Yield to maturity (YTM) in %

3.50
Larger bubble indicates longer tenor RUSSIA 3/29 9.4Y

3.40 Smaller bubble indicates shorter tenor

MEX 4/29 9.5Y

RUSSIA 6/27 7.7Y

3.30 MEX 1/28 8.2Y
COLOM 3/28 8.4Y
3.20 DUGB 4/29 S 9.5Y
MEX 3/27 7.5Y

INDOIS 2/29 S 9.4Y

3.10 INDOIS 3/28 S 8.4Y
KSA 4/30 10.5Y

INDOIS 3/27 S 7.5Y

3.00
SHARSK 3/28 S 8.4Y
KSA 4/29 9.5Y INDON 4/28 8.5Y
KSA 1/29 S 9.3Y INDON 7/27 7.8Y INDON 2/29 9.3Y
2.90 KSA 3/28 8.4Y

2.80 KSA 10/26 7Y

KSA 4/27 S 7.5Y

PANAMA 9/27 8Y
2.70

2.60 QATAR 3/29 9.4Y

QATAR 4/28 8.5Y

2.50 ADGB 9/29 10Y

PHILIP 2/30 10.3Y

2.40
ADGB 10/27 8Y PERU 8/27 7.9Y
HKINTL 2/27 S 7.4Y
PHILIP 2/28 8.3Y
2.30
PHILIP 1/29 9.3Y
KOREA 6/29 9.7Y
KUWIB 3/27 7.4Y
2.20 KOREA 9/28 8.9Y
KOREA 1/27 7.3Y CHINA 11/27 8.1Y
CHINA 10/28 9Y

2.10
2 rating
*Composite 3
AA 4
AA- 5
A+ 6
A 7
A- 8
BBB+ 9
BBB 10
BBB-
* Notes: Yields as on 11-Oct-2019; Composite rating - please refer Appendix for definition and calculation method; Dubai is not rated by any rating agency and we have assigned a proxy rating
of ‘BBB+’ based on its fundamentals with a relative comparison to Emirate of Sharjah (A3/BBB+) and Dubai GREs like DP World (Baa1/BBB+) and DEWA (Baa1); Source: Bloomberg/FAB 12
 GCC inv. grade sovereign bonds vs EM peers: 20y to 30y
Yield to maturity (YTM) in %

4.25
Larger bubble indicates longer tenor
DUGB 1/43 23.3Y
MEX 1/45 25.3Y ROMANI 6/48 28.7Y
4.15 Smaller bubble indicates shorter tenor MEX 1/47 27.3Y MEX 2/48 28.3Y
RUSSIA 6/47 27.7Y
MEX 1/40 20.2Y ROMANI 1/44 24.3Y RUSSIA 9/43 23.9Y
4.05 RUSSIA 4/42 22.5Y

KSA 1/50 30.3Y COLOM 1/41 21.3Y

3.95 KSA 4/49 29.5Y
KSA 10/46 27Y
INDON 1/46 26.2Y INDON 1/44 24.3Y
INDON 1/45 25.3Y
3.85 INDON 1/42 22.3Y
INDON 7/47 27.8Y

3.75
KAZAKS 7/45 25.8Y
3.65
QATAR 3/49 29.4Y
3.55 QATAR 4/48 28.5Y KAZAKS 10/44 25Y

3.45
QATAR 6/46 26.6Y
3.35
ADGB 9/49 30Y QATAR 1/42 22.3Y
QATAR 1/40 20.3Y
3.25 ADGB 10/47 28Y
PERU 11/50 31.1Y

3.15

3.05
CHILE 6/47 27.7Y
CHINA 10/48 29Y MALAYS 4/46 S 26.5Y
2.95 CHILE 10/42 23Y MALAYS 4/45 S 25.5Y

2.85
PHILIP 1/40 20.3Y
2.75 KOREA 9/48 28.9Y
KOREA 6/44 24.7Y PHILIP 2/42 22.3Y
PHILIP 3/41 21.4Y

2.65
2 rating
*Composite 3
AA 4
AA- 5
A+ 6
A 7
A- 8
BBB+ 9
BBB 10
BBB-
* Notes: Yields as on 11-Oct-2019; Composite rating - please refer Appendix for definition and calculation method; Dubai is not rated by any rating agency and we have assigned a proxy rating
of ‘BBB+’ based on its fundamentals with a relative comparison to Emirate of Sharjah (A3/BBB+) and Dubai GREs like DP World (Baa1/BBB+) and DEWA (Baa1); Source: Bloomberg/FAB 13
 GCC sub-inv. grade sovereign bonds vs EM peers: 7y to 10y
Yield to maturity (YTM) in %

7.30 SRILAN 5/27 7.6Y

UKRAIN 11/28 9.1Y
Larger bubble indicates longer tenor NGERIA 2/30 10.4Y
PKSTAN 12/27 8.1Y
7.10 COSTAR 5/28 8.6Y
Smaller bubble indicates shorter tenor TURKEY 1/30 10.3Y COSTAR 11/29 10.1Y
COSTAR 2/29 9.4Y EGYPT 3/29 9.4Y
6.90 TURKEY 4/29 9.5Y EGYPT 11/28 9.1Y
UKRAIN 9/27 7.9Y
6.70 TURKEY 10/28 9Y KENINT 2/28 8.4Y NGERIA 11/27 8.1Y
TURKEY 3/27 7.4Y EGYPT 2/28 8.4Y
6.50 TURKEY 2/28 8.3Y
TURKEY 10/26 7Y
KENINT 5/27 7.6Y EGYPT 11/26 7.1Y
6.30
OMAN 8/29 9.8Y

6.10 OMAN 1/28 8.3Y

5.90
OMAN 3/27 7.4Y
5.70

5.50 BELRUS 2/30 10.4Y

BELRUS 6/27 7.7Y
BAHAMA 11/29 10.1Y JORDAN 1/27 7.3Y
5.30 BHRAIN 10/28 9Y BHRAIN 9/29 9.9Y

5.10

4.90 BAHAMA 11/28 9.1Y

SOAF 9/27 8Y
4.70
SOAF 10/28 9Y DOMREP 7/28 8.8Y
4.50 DOMREP 1/27 7.3Y
SOAF 9/29 10Y
4.30 BHRAIN 3/27 S 7.5Y

4.10 AZERBJ 9/29 9.9Y

GUATEM 6/27 7.6Y
3.90 BRAZIL 5/29 9.6Y

3.70 BRAZIL 1/28 8.2Y

BRAZIL 5/27 7.6Y
3.50

3.30 PARGUY 3/27 7.4Y

3.10
10 rating
*Composite 11
BB+ 12
BB 13
BB- 14
B+ 15
B 16
B-
* Notes: Yields as on 11-Oct-2019; Composite rating - please refer Appendix for definition and calculation method; Source: Bloomberg/FAB 14
 GCC sub-inv. grade sovereign bonds vs EM peers: 20y to 30y
Yield to maturity (YTM) in %

8.20 EGYPT 3/49 29.4Y

Larger bubble indicates longer tenor KENINT 2/48 28.4Y
EGYPT 1/47 27.3Y
NGERIA 11/47 28.1Y
8.00
Smaller bubble indicates shorter tenor EGYPT 2/48 28.4Y
7.80

7.60
OMAN 1/48 28.3Y
7.40
OMAN 3/47 27.4Y TURKEY 2/45 25.3Y

7.20 TURKEY 1/41 21.3Y

COSTAR 3/45 25.4Y EGYPT 4/40 20.5Y
TURKEY 5/47 27.6Y COSTAR 4/44 24.5Y
JORDAN 10/47 28Y
7.00

6.80 TURKEY 4/43 23.5Y

COSTAR 4/43 23.5Y
6.60
BHRAIN 9/47 27.9Y
6.40

6.20 BHRAIN 9/44 24.9Y

6.00
DOMREP 4/44 24.5Y
DOMREP 1/45 25.3Y
DOMREP 6/49 29.6Y
5.80 SOAF 9/49 30Y
SOAF 6/48 28.7Y
SOAF 9/47 28Y
5.60
SOAF 7/44 24.8Y
SOAF 3/41 21.4Y
SOAF 10/46 27Y
5.40

5.20
GUATEM 6/50 30.6Y
5.00
BRAZIL 2/47 27.4Y
4.80
BRAZIL 1/45 25.3Y
BRAZIL 1/41 21.2Y
4.60 PARGUY 3/48 28.4Y PARGUY 3/50 30.5Y

4.40
10 rating
*Composite 11
BB+ 12
BB 13
BB- 14
B+ 15
B
* Notes: Yields as on 11-Oct-2019; Composite rating - please refer Appendix for definition and calculation method; Source: Bloomberg/FAB 15
 Composite Rating Composite Rating

AA-

AA+
AA+

AAA
B 2
BB-4
BB 5
BB+6
7
9

B+ 3
8
A- 10
A 11
A+12
13
AA14
15

BBB

1
B 2
B+ 3
BB- 4
BB 5
BB+6
7
BBB8
9
A+ 12
AA-13
AA14
15
16
17

A- 10
A 11

BBB-
BBB-

BBB+
BBB+
IsDB
United Arab Emirates (UAE)
FAB
Emirate of Abu Dhabi
NBK
Emirates Dev. Bank Kuwait
QNB
Qatar
Ind Bank of Kuwait
Kingdom of Saudi Arabia
Kuwait Intl Bank
KFH Emirate of Ras Al-Khaimah
GCC Sovereigns

ISCODV
Emirate of Sharjah
ADCB
Al-Hilal Emirate of Dubai*

ADIB Sultanate of Oman

QIB
Kingdom of Bahrain
QIIB
Al Ahli Bank of Kuwait
CBK
Composite Rating
Gulf Bank

B
A-

ENBD
A+
AA
AA-

10
A11
12
13
14
15

B- 1
2
B+3
4
BB5
6
7
8
9

BB-
AA+

BB+
BBB
BBB-

Emirates Islamic Bank

BBB+

Ahli Bank QSC

ADNOC
Boubyan bank
Abu Dhabi Crude Oil Pipeline
SABB
Mubadala
GCC credit quality at a glance

Doha Bank Waha

CBQ Apicorp

Al Khalij Qatari Diar

Samba Qatar Petroleum
Al Rajhi Etisalat
Dubai Islamic Bank RASGAS
Industries Qatar
Noor
Gulf Inv Corp Saudi Aramco
Dolphin Energy
Burgan Bank
GCC Financials

QGTS (Nakilat)
Warba Bank
SECO
Mashreq
SABIC
BSF
Etihad
Arab National Bank
Qatar Reinsurance
NCB
Saudi Telecom
Riyad Bank General Holding (SENAAT)
Com Bank of Dubai Ooredoo (Qtel)
Saudi Inv Bank Taqa
Gulf Intl Bank DP World
GCC Corporates

Tamweel DEWA

Bank of Sharjah MAF

Sharjah Islamic Bank JAFZ

Aldar
RAKBANK
EQUATE Petrochem
NBF (Fujairah)
DIFC Investment
UAB
Emaar Malls Grp
Ahli United Bank
Kuwait Projects Co
ABC
Emaar Prop
HSBC Bank Oman
Almarai
NBO Emirates Strategic Inv. Co.
Oman Arab Bank NMC Health
Bank Muscat Mazoon Electricity Co
Bank Dhofar OMGRID
Bank Sohar Investcorp

Ahli Bank SAOG Oil and Gas Holding

Al Baraka Banking Group Damac

Mumtalakat
assigned a proxy rating of ‘BBB+’ based on its fundamentals with a relative comparison to Emirate of Sharjah (A3/BBB+) and Dubai GREs like DP World (Baa1/BBB+) and DEWA (Baa1); Source: Bloomberg/FAB

NBB
Notes: The ratings mentioned here are composite credit rating for each issuer. Please see appendix for the methodology of calculating composite credit rating; * Dubai is not rated by any rating agency and we have

Batelco
BBK
Dar Al Arkan
GFH
Ezdan Holding
16
 GCC’s major primary deals in 2019 and their performance
Secondary market performance since issue (change in z-spread and cash price since issue till 11-Oct-19)

Bond/Sukuk Bond/Sukuk
Cash price change Z-spread change (in bps)* Cash price change Z-spread change (in bps)*
(Pricing date in dd/mm) (Pricing date in dd/mm)
+12.6 KSA 4.375 29 (9/Jan) -45.6 +2.6 SIB 5 (S) Jr Sub PERP Nxt C: 7/2/2025 (25/Jun) -35.2

+23.5 KSA 5.25 50 (9/Jan) -33.9 +1.2 BBK 5.5 24 (2/Jul) -0.7

+5.8 FABUH 3.875 24 (S) (15/Jan) -38.0 +0.1 BGBKKK 5.7492 Jr Sub PERP Nxt C: 7/9/2024 (2/Jul) +28.7

+7.0 DIBUH 6.25 (S) Jr Sub PERP Nxt C: 1/22/2025 (16/Jan) -44.4 +2.8 KSA 0.75 27 € (2/Jul) -22.1

+5.3 MASQUH 4.25 24 (19/Feb) -31.8 +7.4 KSA 2 39 € (2/Jul) -19.9

+4.0 MUMTAK 5.625 24 (S) (20/Feb) -5.4 +2.3 DPWDU 3.875 29 (S) (11/Jul) +15.3

+5.5 QIIKQD 4.264 24 (S) (26/Feb) -38.9 +0.0 ESICSU 3.939 24 (S) (23/Jul) +24.9

+5.5 ALMARA 4.311 24 (S) (26/Feb) -40.4 +0.3 OMAN 4.875 25 (25/Jul) +21.4

+3.6 EMDEBK 3.516 24 (27/Feb) +9.3 -1.8 OMAN 6 29 (25/Jul) +57.1

+5.1 QATAR 3.375 24 (6/Mar) -21.1 -1.4 EMAAR 3.875 29 (S) (10/Sep) +13.7

+11.9 QATAR 4 29 (6/Mar) -36.6 +0.8 BOSUH 4 24 (11/Sep) -20.4

+22.5 QATAR 4.817 49 (6/Mar) -19.5 +0.1 WARBAB 2.982 24 (S) (17/Sep) -3.2

+4.6 EBIUH 6.125 Jr Sub PERP Nxt C: 3/20/2025 (13/Mar) -2.9 +0.8 ABQKQD 3.125 24 (17/Sep) -12.0

+4.3 QNBK 3.5 24 (21/Mar) -18.3 +0.4 ADGB 2.125 24 (23/Sep) -9.5

+5.8 SHARSK 3.854 26 (S) (26/Mar) -27.9 +0.4 ADGB 2.5 29 (23/Sep) -12.1

+4.9 RAKBNK 4.125 24 (2/Apr) -40.3 -1.0 ADGB 3.125 49 (23/Sep) -4.0

+1.3 ARAMCO 2.75 22 (9/Apr) +20.4 +1.5 BHRAIN 4.5 27 (S) (24/Sep) -37.0

+2.1 ARAMCO 2.875 24 (9/Apr) +29.8 +1.8 BHRAIN 5.625 31 (24/Sep) -35.6

+4.1 ARAMCO 3.5 29 (9/Apr) +33.9 +0.1 DPWDU 3.75 30 (S) CALL (24/Sep) -13.7

+7.7 ARAMCO 4.25 39 (9/Apr) +29.5 -0.4 DPWDU 4.7 49 CALL (24/Sep) -12.7

+9.4 ARAMCO 4.375 49 (9/Apr) +30.7 +1.9 FUJAIR 5.875 Jr Sub PERP Nxt C: 10/1/2024 (24/Sep) -53.2

+7.3 STCAB 3.89 29 (S) (2/May) +0.2 -0.3 ISDB 1.957 24 (S) (25/Sep) +4.0

+8.2 MAFUAE 4.638 29 (S) (7/May) -22.1 +0.0 SAMBA 2.75 24 (25/Sep) -1.4

+3.2 KIBKK 5.625 (S) Jr Sub PERP Nxt C: 6/10/2024 (29/May) -25.8 +1.7 TAQAUH 4 49 (26/Sep) -14.8

-5 0 5 10 15 20 25 30 -80 -40 0 40 80 -4 -2 0 2 4 6 8 10 -90 -60 -30 0 30 60 90

Notes: (S) in the ticker indicates Sukuk; All bonds/sukuks are US$ senior unsecured debt of the issuer unless an abbreviation for the debt type is highlighted – e.g. – “Unsec” = Unsecured debt; “Sub” =
Subordinated; “Sr Sub” = Senior Subordinated; “Jr Sub” = Junior Subordinated; “Perp” = Perpetual; Callable, Puttable and Sinkable highlighted as “Call”, “Puta”, & “Sink” respectively; Source: Bloomberg/FAB 17
 GCC spread performance summary
Top 10 / bottom 10 bond/sukuk performers (z-spread, bps) in each category from 31st Dec 2018 to 11th Oct 2019

Sovereigns Financials Corporates

OMANGS 4.397 24 (S) -127 ABQKQD 3.5 22 -110 KWIPKK 9.375 20 -159
AUBBI 6.875 Jr Sub PERP
OMAN 4.125 23 -118 -99 OILGAS 7.625 24 -138
Nxt C: 29/4/20
NOORBK 6.25 (S) Jr Sub
OMANGS 5.932 25 (S) -114 -98 OMGRID 3.958 25 -116
PERP Nxt C: 1/6/21
MAFUAE 5.5 Jr Sub PERP
OMAN 3.875 22 -108 -92 KWIPKK 5 23 -112
Nxt C: 7/9/22
ALAHKW 7.25 Jr Sub PERP
OMAN 3.625 21 -100 -88 OILGAS 8.375 28 -107
Nxt C: 26/9/23
BHRAIN 6.875 25 (S) -79 ADCBUH 4 23 -86 KWIPKK 4.5 27 -102

BHRAIN 6.125 23 -75 ALKHAL 4.75 23 -83 OTELOM 5.625 23 Sec -99

BHRAIN 7 26 -73 ADCBUH 2.625 20 -83 MAZOON 5.2 27 (S) -98

BHRAIN 5.624 24 (S) -73 ABQKQD 3.625 21 -83 TABRED 5.5 25 (S) -90
NTBKKK 5.75 Jr Sub PERP
BHRAIN 5.875 21 -71 -75 OILGAS 7.5 27 -87
Nxt C: 9/4/21

-7 BHRAIN 6 44 -12 ABQKQD 3.125 24 *17/9/19 +0.2 STCAB 3.89 29 (S) *2/5/19

-7 QATAR 4.625 46 -3 WARBAB 2.982 24 (S) *17/9/19 +8 INVCOR 5 27 (S)

EBIUH 6.125 Jr Sub PERP Nxt C:

-4 ADGB 3.125 49 *23/9/19 -3 +14 EMAAR 3.875 29 (S) *10/9/19
20/3/25 *13/3/19
ADIBUH 7.125 (S) Jr Sub PERP
-3 DUGB 5.25 43 -3 +15 DPWDU 3.875 29 (S) *11/7/19
Nxt C: 20/9/23

+13 OMAN 6.5 47 -3 BKMBOM 4.875 23 +20 ARAMCO 2.75 22 *9/4/19

+15 OMAN 6.75 48 -1 SAMBA 2.75 24 *25/9/19 +25 ESICSU 3.939 24 (S) *23/7/19

+21 OMAN 4.875 25 *25/7/19 -1 BBK 5.5 24 *2/7/19 +30 ARAMCO 4.25 39 *9/4/19

+29 QATAR 5.25 20 +9 EMDEBK 3.516 24 *27/2/19 +30 ARAMCO 2.875 24 *9/4/19

DIBUH 6.75 (S) Jr Sub PERP Nxt

+34 ADWA 3.925 20 SINK +12 +31 ARAMCO 4.375 49 *9/4/19
C: 20/1/21
BGBKKK 5.7492 Jr Sub PERP Nxt
+57 OMAN 6 29 *25/7/19 +29 +34 ARAMCO 3.5 29 *9/4/19
C: 9/7/24 *2/7/19

120 100 80 60 40 20 0 -20 -40 -60 -80 -100 -120 100 75 50 25 0 -25 -50 -75 -100 -125 150 125 100 75 50 25 0 -25 -50 -75 -100 -125 -150 -175

Notes: (1) We have used a list of GCC public debt which are quoted by FAB trading desk and have maturity in 2020 and beyond; (2) (S) in the ticker indicates Sukuk; (3) All bonds/sukuks are $ denominated
unless any other currency is highlighted in the ticker. (3) All bonds/sukuks are senior unsecured debt unless an abbreviation for the debt type is highlighted in the ticker – e.g. – “Unsec” = Unsecured debt
junior to Senior Unsecured debt; ; “Sub” = Subordinated; “Sr Sub” = Senior Subordinated; “Jr Sub” = Junior Subordinated; “Perp” = Perpetual; Callable, Puttable and Sinkable highlighted as “Call”, “Puta”, &
“Sink” respectively; (4) * highlights spread change from the pricing date as it was issued in 2019; Source: FAB/Bloomberg 18
 Sovereigns spread performance – Abu Dhabi

ADGB 4.125 47

*23/9/19
160.0

150.0
ADWA 3.925 20 SINK -4

*23/9/19

ADGB 3.125 49
140.0 -9

130.0

ADGB 3.125 27
*23/9/19

ADGB 3.125 26

ADGB 2.5 29
120.0

110.0
z-spread (bps)

ADGB 2.125 24
100.0
ADGB 2.5 22
90.0

80.0 -12
ADGB 2.125 21

+34 -25
70.0
-25
60.0
-9
50.0
-18
40.0

30.0 -20
20.0
Maturity
Short Long
term term
31-Dec-18 11-Oct-19 Curve on 31-Dec-18 Curve on 11-Oct-19

Notes: * Highlights spread change from the pricing date as it was issued in 2019; Source: FAB/Bloomberg 19
 Sovereigns spread performance – Kuwait

110.0

105.0

KUWIB 3.5 27
100.0

95.0

90.0

KUWIB 2.75 22
85.0

80.0

75.0
z-spread (bps)

70.0

65.0

60.0 -24
55.0

50.0

45.0 -22
40.0

35.0

30.0

25.0

20.0
Maturity
Short Long
term term
31-Dec-18 11-Oct-19 Curve on 31-Dec-18 Curve on 11-Oct-19

Source: FAB/Bloomberg 20
 Sovereigns spread performance – Qatar

*6/3/19
QATAR 5.103 48
QATAR 4.625 46
210.0

QATAR 6.4 40

QATAR 5.75 42
200.0

*6/3/19
190.0

QATAR 4.817 49
180.0
170.0 -18 -20

QATAR 9.75 30
QATAR 4 29
160.0

QATAR 4.5 28
*6/3/19
150.0 -7

QATAR 3.25 26
-18 -14
140.0

QATAR 3.241 23 (S)

QATAR 3.875 23
130.0
z-spread (bps)

QATAR 3.375 24
QATDIA 5 20

120.0
QATAR 4.5 22

110.0
QATAR 2.375 21

100.0 -24
90.0 -26 -37
QATAR 5.25 20

80.0
70.0 -31
60.0
-21
50.0
-41
40.0 -42 -16
-35 -43
30.0
20.0
+29
10.0
0.0
Maturity
Short Long
term term
31-Dec-18 11-Oct-19 Curve on 31-Dec-18 Curve on 11-Oct-19

Notes: * Highlights spread change from the pricing date as it was issued in 2019; If "Sukuk", the ticker contains "(S)" next to the maturity year; Source: FAB/Bloomberg 21
 Sovereigns spread performance – Saudi Arabia

*9/1/19
KSA 4.625 47
270.0

KSA 5 49
KSA 4.5 46
255.0

*9/1/19

KSA 5.25 50
240.0

225.0

KSA 4.375 29

*2/7/19
KSA 4.5 30
-34

KSA 4.303 29 (S)

210.0 -22 -24
-18

KSA 3.625 28
195.0

KSA 3.628 27 (S)

KSA 3.25 26

KSA 2 39 €
180.0 KSA 4 25
z-spread (bps)

KSA 2.875 23

165.0
KSA 2.894 22 (S)

*2/7/19
KSA 2.375 21

150.0

135.0 -38

KSA 0.75 27 €
120.0 -33 -32 -46 -20
-33 -23
105.0
-44
90.0

75.0
-49
60.0
-47
-51 -22
45.0

30.0
Maturity
Short Long
term term
31-Dec-18 11-Oct-19 Curve on 31-Dec-18 Curve on 11-Oct-19
Notes: * Highlights spread change from the pricing date as it was issued in 2019; If "Sukuk", the ticker contains "(S)" next to the maturity year; Source: FAB/Bloomberg 22
 Sovereigns spread performance – Dubai

DUGB 5.25 43
275.0

250.0

-3
225.0

DUGB 5 29 (S)
200.0

DUGB 3.875 23 (S)

DUGB 5.591 21 PUTA

DUGB 6.45 22 (S)

175.0
z-spread (bps)

150.0 -18

125.0
DUGB 7.75 20

100.0
-38
-37
75.0
-45
50.0

25.0

-50
0.0
Short Maturity Long
term term
31-Dec-18 11-Oct-19 Curve on 31-Dec-18 Curve on 11-Oct-19

Notes: If "Sukuk" the ticker contains "(S)" next to the maturity year; Source: FAB/Bloomberg 23
 Sovereigns spread performance – Sharjah

*26/3/19
190.0

SHARSK 4.226 28 (S)

SHARSK 3.764 24 (S)
180.0

SHARSK 3.854 26 (S)

170.0

160.0

150.0

140.0
SHARSK 3.839 21 (S)
z-spread (bps)

130.0 -33

-28
120.0

110.0

100.0 -41

90.0

80.0

70.0
-26

60.0

50.0
Maturity
Short Long
term term
31-Dec-18 11-Oct-19 Curve on 31-Dec-18 Curve on 11-Oct-19

Notes: * Highlights spread change from the pricing date as it was issued in 2019; If "Sukuk" the ticker contains "(S)" next to the maturity year; Source: FAB/Bloomberg 24
 Sovereigns spread performance – Oman

*25/7/19

OMAN 6.5 47

OMAN 6.75 48
600.0
580.0
560.0

OMAN 5.375 27

OMAN 5.625 28

OMAN 6 29
540.0 +15

OMANGS 5.932 25 (S)

+13

OMAN 4.75 26
520.0

OMANGS 4.397 24 (S)

*25/7/19
500.0
480.0

OMAN 4.125 23
460.0

OMAN 4.875 25
440.0
OMAN 3.875 22

-19
z-spread (bps)

420.0
-44
400.0
OMAN 3.625 21

-41 +57
380.0
360.0
340.0
320.0
300.0 +21
280.0 -114
260.0
-127
240.0 -118
220.0
-108
200.0
-100
180.0
160.0
140.0
Maturity
Short Long
term term
31-Dec-18 11-Oct-19 Curve on 31-Dec-18 Curve on 11-Oct-19

Notes: * Highlights spread change from the pricing date as it was issued in 2019; If "Sukuk" the ticker contains "(S)" next to the maturity year; Source: FAB/Bloomberg 25
 Sovereigns spread performance – Bahrain
550.0

*24/9/19

BHRAIN 7.5 47
525.0

BHRAIN 6 44
BHRAIN 6.75 29
500.0

BHRAIN 7 28
*24/9/19
475.0

BHRAIN 5.625 31
BHRAIN 6.875 25 (S)

BHRAIN 7 26
450.0 -28

BHRAIN 5.25 25 (S)

BHRAIN 5.624 24 (S)
425.0 -7

BHRAIN 4.5 27 (S)

400.0

BHRAIN 6.125 23
BHRAIN 6.125 22
375.0
z-spread (bps)

BHRAIN 5.875 21

350.0
-36
-58 -60
325.0
BHRAIN 5.5 20

300.0
-73
275.0

250.0 -65 -79 -37

225.0 -73
200.0 -64 -75
175.0
-71
150.0
-71
125.0

100.0

75.0
Maturity
Short Long
term 31-Dec-18 11-Oct-19 Curve on 31-Dec-18 Curve on 11-Oct-19 term

Notes: * Highlights spread change from the pricing date as it was issued in 2019; If "Sukuk" the ticker contains "(S)" next to the maturity year; Source: FAB/Bloomberg 26
Appendix

 As mentioned at the start of this report, we have used “composite ratings” for this analysis – i.e. the average of the
ratings assigned by three leading rating agencies Moody’s, S&P and Fitch – in order to provide a more representative
view of the credit strength of each bank.

 The composite rating is calculated as follows:

 A score is assigned to the rating from each rating agency: AAA or equivalent being the best with a score of “1”,
followed by AA+ or equivalent as “2”, AA or equivalent as “3”, AA- or equivalent as “4” and so on;
 For example FAB is rated Aa3/AA-/AA- by Moody’s/S&P/Fitch. So the scores are 4/4/4;
 Hence the average of the scores is “4” which indicates a composite rating of “AA-” for FAB;
 In case the average score is not an absolute number – e.g. 4.33 (average of 4, 5, & 4 ) – the final score is derived
by rounding off the average score to the nearest whole number. In this case “4”.

 Indices shown on slide # 6 & 11 are Bloomberg Barclays bond indices available on Bloomberg; All country index are
aggregate index for major US$ bonds issued from that country

 GCC US$ Inv. Grade (A+): BGCITRUU Index
 GCC US$ IG & HY (A): BGCCTRUU Index
 EM Asia US$ Inv. Grade (A-): BEUGTRUU Index
 EM Asia US$ aggregate (BBB+): BEUCTRUU Index
 EM Inv. Grade US$ (BBB+): BEHGTRUU Index
 EM Hard CCY Aggregate (BBB-): I23121 Index
 UAE aggregate index: I29135US Index
 KSA aggregate index: I29134US Index
 Qatar aggregate index: I29133US Index
 Kuwait aggregate index: I29132US Index
 Oman aggregate index: I31504US Index
 Bahrain aggregate index: I28750US Index

27
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Thank You
Chavan Bhogaita Rakesh Sahu
Managing Director, Head of Market Insights & Strategy, Director, Market Insights & Strategy,
Global Markets, First Abu Dhabi Bank Global Markets, First Abu Dhabi Bank
Tel: +971 2 6110 127 Tel: +91 22 333 11138
Chavan.Bhogaita@bankfab.com Rakesh.KumarSahu@bankfab.com

Market Insights & Strategy

Global Markets
First Abu Dhabi Bank
MarketInsights&Strategy@bankfab.com

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