Special Features
Middle East Debt Issuance Almost Doubles To US$11 Billion In Q1 2012
Thomson Reuters today released its first quarter 2012 investment banking analysis for the Middle East region, which found debt issuance reached US$11.0 billion during the first quarter of 2012, nearly double the amount raised during the same period in 2011 (US$5.7 billion). Investment grade corporate debt accounted for 81% of all Middle Eastern DCM activity during the quarter, while high yield accounted for 10%.The review examines the performance of the Middle East investment banking industry in the region’s debt and equity capital markets, both conventional and Islamic. It includes dedicated regional rankings of banks and advisors operating in the Middle East based on their deals and fees.
In short the analysis of Middle East investment banking, drawn from Thomson Reuters’ data shows that compared with the same period in 2011:
• Debt issuance at US$11 billion – a near 100% increase
• Investment banking fees reached US$90.9 million – a 8% decline
• Mergers and acquisitions reached US$4.9 billion – a 22% rise
• Equity capital issuance was just over US$1 billion – a 21% fall
Commenting on the decline in investment banking fees, Russell Haworth, Managing Director, Middle East & Africa at Thomson Reuters, said: “Investment banking fees fell this quarter continuing last year’s trend as the Arab Spring continues to take its toll on the banking sector. This quarter was the lowest quarter for fees in the region since the second quarter of 2005.”
Fees for mergers and acquisitions (M&A) during the first quarter of 2012, which accounted for 51% of the overall fee pool, totaled US$46.2 million, down 42% from the same period last year. Debt capital markets (DCM) fee activity in the first three months of the year was more than five times higher than during the same period in 2011 at US$36.2 million. Meanwhile fees from syndicated lending and ECM totaled US$5.9 million and US$2.6 million respectively.
Deutsche Bank topped the Middle Eastern DCM fee rankings during the first quarter earning 13.1% of the fees while HSBC headed the M&A fee rankings with US$5.3 million.
In terms of Middle East M&A activity, the telecoms sector was the most targeted industry with US$1.8 billion or 36% of the activity. Egypt was the most active Middle Eastern country with US$1.9 billion for 39% of the quarter’s activity. Credit Suisse topped the Any Middle Eastern Involvement M&A ranking with US$3.31 billion. Lazard topped the Middle Eastern target M&A ranking controlling 36% of the market with advisory work on two of the top ten deals. The top Middle Eastern targeted deal so far this year was Golden Investments Co’s US$987 million bid for Damas International in March.
In equity capital markets follow-ons accounted for 89% of quarterly activity and the top Middle Eastern ECM transaction was a US$313 million follow-on from Saudi Arabian telecoms company Etihad Atheeb. Financials remained the most active industry in the Middle East during the first quarter of 2012 with 36% of activity.
Telecoms and energy & power collectively accounted for 51% of ECM activity. Banque Saudi Fransi topped the Middle Eastern equity capital markets rankings, as sole-lead bookrunner for Etihad Atheeb’s follow-on offering.
In terms of overall DCM, Islamic debt issuance reached US$7.7 billion from 14 issues. This was twice as much as during the first quarter in 2011. The top Islamic issuer continued to be Malaysia with 47% of the activity. Issuers in the financials sector accounted for 68% of Islamic DCM issuance during the first quarter of 2012. HSBC took the top spot in the Islamic bond ranking for the first quarter of 2012 with 6 issues, which raised US$1.9 billion.
