Hard-currency debt issuance in MENA was scarce 10 years ago as MENA has generally been characterised by budget-surplus countries, which have little to no need to borrow at all. Starting in 2016, the major economies in the region stepped up their efforts to build a market for themselves. While the local currency issues are now conducted on a continuous basis, hard currency issues are mostly opportunistic, which sometimes limits secondary-market trading volumes, although it is a fast-growing market, which EM-focused investors find hard to ignore.
The Middle Eastern bond market is growing and evolving, with unique characteristics shaped by regional economic and regulatory dynamics. In this sense, bond markets in the Middle East differ from the other emerging markets in some terms, such as market size, diversity, regulatory environment, investor base, and growth prospects.
The first aim of this report is to provide a background for MENA sovereigns, taking into consideration the quite different aspects of the countries and markets. Following that, we share our ideas about investing in hard currency sovereign bonds in MENA.