Dubai: Middle Eastern debt issuance reached US$4.0 billion during the first quarter of 2014, down 67% from the same period in 2013 and the lowest quarterly total since the third quarter of 2011, according to an expert.
“It is the slowest annual start for debt capital markets activity in the region since 2009,” Nadim Najjar, Managing Director, Middle East, Africa, and Russia/CIS, said.
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, on Tuesday released the quarterly investment banking analysis for the Middle East region.
“Middle Eastern companies raised US$1.0 billion from 2 initial public offerings during the first quarter of 2014, a 37% decline in IPO activity from the same period in 2013 (US$1.6 billion),” he said.
“There were no follow-on or convertible offerings in the region during the first quarter so overall, ECM activity fell 46%. The larger of the two IPOs was the US$905 million offering from Mesaieed Petrochemical Holding, a unit of state-owned Qatar Petroleum. It was Qatar’s first IPO since 2010. Egypt’s Arabian Cement Company raised US$109 million in March. As sole bookrunner on the Mesaieed Petrochemical Holdings IPO, Qatar National Bank took first place in the 1Q 2014 Middle Eastern ECM ranking,”
Najjar pointed out that Middle Eastern investment banking fees reached US$120.3 million during the first quarter of 2014, down 17% from the previous quarter and a 2% decline compared to the first quarter of 2013.
“Fees from completed M&A transactions totalled US$46.4 million, up 19% from the same period in 2013, and accounting for 39% of this year’s overall Middle Eastern fee pool. Equity capital markets underwriting fees totalled US$39.6 million, more than twice the amount registered during the first quarter of 2013 (US$17.4 million) and marking the best annual start for ECM fees in the Middle East since 2008. ECM fees account for 33% of the fee pool, the highest first quarter share since 2006,” he added.
During the first quarter of 2014, Middle Eastern investment banking fees reached US$120.3 million, down 17% from the previous quarter. The value of announced M&A transactions with any Middle Eastern involvement reached US$5.7 billion during the first quarter of 2014, 15% less than the US$6.8 billion witnessed during the same period last year, and marking the lowest first quarter total in the region since 2004.
Najjar pointed out that fees from debt capital markets underwriting declined 47% year-on-year to US$17.4 million, while syndicated lending fees fell 49% to US$16.9 million. Lazard earned the most investment banking fees in the Middle East during the first quarter of 2014, a total of US$28.8 million for a 24% share of the total fee pool. Lazard topped the Middle Eastern completed M&A fee league table, while Qatar National Bank was first in the ECM underwriting fee rankings. JP Morgan and Samba Financial Group took the top spots in the Middle Eastern DCM and loans fee rankings, respectively.
Najjar pointed out the value of announced M&A transactions with any Middle Eastern involvement reached US$5.7 billion during the first quarter of 2014, 15% less than the US$6.8 billion witnessed during the same period last year, and marking the lowest first quarter total in the region since 2004. The low first quarter total was largely impacted by an 85% decline in domestic and inter-Middle Eastern M&A which totalled just US$674 million, the lowest first quarter total since 2006.
“Outbound M&A drove activity, up 147% from this time last year to total US$3.5 billion. Saudi Arabian overseas acquisitions accounted for 59% of Middle Eastern outbound M&A activity. Inbound M&A also increased, climbing 171% to US$506 million.
“The largest deal during the first quarter was Aramco’s purchase of a US$2.0 billion stake in South Korea’s petroleum and refinery company, S-Oil Corp. Boosted by this deal, Energy & Power was the most targeted sector, accounting for over half of first quarter activity. Morgan Stanley topped the 1Q 2014 announced any Middle Eastern involvement M&A league table with US$740 million.”
“Investment grade corporate debt totalled US$3.3 billion and accounted for 84% of the first quarter total.”
“The United Arab Emirates was the most active nation accounting for 41% of activity, followed by Saudi Arabia with 38%. International Islamic debt issuance declined 34% year-on-year to reach US$6.4 billion, the lowest first quarter total since 2011. JP Morgan took the top spot in the Middle Eastern bond ranking during the first quarter of 2014 with a 17% share of the market.”