In the first half of the year, Qatar sovereign issuances totalled $10bn; Qatar is currently rated ‘Aa3 stable’ by Moody’s


Qatar is among the 'top 10' emerging market (EM) sovereign issuers in H1, 2020, with issuances totalling $10bn, according to Moody's Investors Service.

Investment-grade Middle East sovereigns accounted for $32bn of issuance in the first half of the year, Moody's said in its ‘Global Emerging Market Issuance Report’ issued on Thursday.

Middle East countries accounted for 34% of EM sovereign issuance in H1 2020, as governments in the region turned to market issuance to cushion the impact of the coronavirus and oil price slide and fund counter-cyclical spending, it said.

“This further reinforces the region’s rising dominance of EM sovereign issuance. By contrast, SubSaharan African eurobond issuance has largely dried up, and a major revival in market borrowing is unlikely given that many countries in the region are facing acute external stress,” Moody’s noted.

Despite enduring the temporary market shutdown in March, EM eurobond issuance is running at a record rate, with volumes reaching $343bn in the first six months of 2020.

Full-year issuance is on course to test all-time highs, as highly rated governments and companies take advantage of normalising financial conditions to raise fresh funding and refinance existing obligations with longer maturities.

That said, not all issuers will benefit from more favourable conditions. For those lower-down the credit quality spectrum, access to international capital markets is likely to remain challenging.

While lower than last year, EM corporate deal flow is picking up. Investment-grade issuance has emerged largely unscathed from market turbulence in March and April, but high-yield segment has yet to fully recover.

Oil and gas represented the largest-issuing sector in H1, 2020 (26% of total), overtaking real estate and property for the first time since 2017.

Many national oil companies have retained strong access to capital given their strategic importance to respective governments, Moody’s noted.

Corporate bond issuance growth, it said is unlikely to accelerate materially in H2 given the precarious investment outlook in most sectors, although a further pick-up in China property sales would underpin additional bond supply.

Despite the impact of the coronavirus pandemic, emerging market eurobond issuance is on course to test all-time highs this year as highly rated governments and companies take advantage of normalising financial conditions to refinance and raise new funding, Moody's Investors Service said.

"Investment-grade debt issuers are driving a return to form in emerging market foreign-currency bond activity," said Rahul Ghosh, a Moody's senior vice president and the report's author. "That said, not all issuers will benefit from more favourable conditions and access to international capital markets is likely to remain challenging for those with weaker credit quality,” Ghosh added.

Moody's Investors Service said, “Financial conditions in emerging markets are gradually normalising following the swift and well-coordinated global policy response to suppress market volatility earlier in the year.”


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