GCC bond issuance is expected to surge this year on the back of heavy infrastructure spending and refinancing needs in the region although its issuance of conventional bonds and sukuks (Islamic bonds) fell to $28.97bn last year from $36.90bn , data show. This, according to IFR, a Thomson Reuters unit, was partly because of jitters about the US Federal Reserve's plans to cut its monetary stimulus, which widened bond spreads globally, and partly due to the region's government-related entities (GREs) staying away from the market. Credit risk research firm, Standard and Poor's Rating Services (S&P), expects demand for sukuk by corporate and infrastructure issuers in the GCC region to continue growing at a double-digit pace over the next two years. The drivers for sukuk in the coming years in the Gulf Co-operation Council countries are likely to be refinancing requirements, the vast government programmes for building infrastructure and tighter global and local regulation of banks that could dampen their issuance. S&P said infrastructure plans included the much-needed investment in power and water, expansion related to events like the FIFA World Cup in Qatar in 2022, and corporates aiming to diversify their sources of funding with the aim of supporting the development of Islamic finance in the region. The GCC will have more than $30bn of bonds and syndicated loans maturing in 2014, and refinancing requirements in the region can bring demand for bond issues. Many analysts believe that given the amount of money that will be needed to fund the $140bn of infrastructure projects planned in the coming years, regular Qatari issuance is expected through government-related entities (GREs). Such thinking could also apply to Dubai , whose economy is back on the track. Nonetheless, the emirate has lots of funding requirements especially in view of its winning the bid to host World Expo 2020. Qatar Central Bank has come out with quarterly bond issues since March 2013 . Since June 2013 , the Qatar Exchange (QE) had announced the trading of government bonds issued by QCB. Clearly, it was a step towards launching a market for corporate bonds. While the sukuk demand was expected to pick up in 2014, the tapering of monetary stimulus by the US Fed might create volatility in interest rates in 2014. Both the pricing and the timing of issues will be challenging on account of this volatility,' points out Doha Bank Group CEO, Dr R Seetharaman . The GCC will have more than $30bn of bonds and syndicated loans maturing in 2014, and refinancing requirements in the region can bring demand for bond issues, he said. Bullish sentiment prevails in the Gulf's sukuk market also because of the GCC government's calls for greater Islamic issuance by corporate and infrastructure entities and the perceptible improvement in Islamic bonds' credit quality due to better economic conditions across the Gulf Co-operation Council region.
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