Emerging Markets: Middle East debt markets roll with the punches

The Middle East faces a very tricky 2018. War rages in Yemen. Qatar and its neighbours are at loggerheads, in an inter-Gulf feud without precedent. Saudi Arabia is purging its princes. But bond and loan markets are placid. Overall borrowing in the region in 2017 came in at a much higher level than before the oil price fell in 2014. The feeling across the capital markets is firmly that although the region poses risks, it is also rife with opportunities for 2018. One country where that optimism might not be so high is Qatar. The political turmoil in the region has reined in debt capital market bankers’ enthusiasm about Qatar, once the jewel of the Middle East capital markets. On June 5 last year, Saudi Arabia, the United Arab Emirates, Bahrain, Yemen, Egypt and Libya cut diplomatic ties with Qatar and installed sanctions over allegations of the emirate’s links to terrorist groups. In December 2017, Qatar National Bank and Commercial Bank of Qatar approached the international loan market. Now banks are brushing their concerns aside and bankers are more optimistic about Qatar’s funding capability.