The United Arab Emirates’ Securities and Commodities Authority (SCA) has issued new rules that could make it a key area for bond and sukuk insurance, says the rating agency Fitch.
If the new regulations prove to be a hit with smaller corporates in the UEA, it is thought that issuers in Qatar, Oman and Kuwait could follow suit, in the hope of diversifying and extending the duration of their financing. This, in turn, could lead other regional markets to undergo similar reforms.
At present, corporates in the UAE and other Gulf Cooperation Council Countries rely on short-term bank loans, with limited access to local-currency bond issuance. Only blue chip companies can afford to issue bonds in the international market, says Fitch.
By cutting minimum issue size to the equivalent of $2.7m, a fifth of the previous figure, the new rules hope to open up bond and sukuk markets to smaller issuers. Review and approval times will also shrink to five days and private bonds that are not issued on the UAE securities exchanges will not need SCA approval.
A total of US$4.88 trillion of debt has been sold so far this year reports Dealogic, close to the level of 2007 when US$4.91 trillion of bonds were issued over the same period.
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