What would you identify as the main trends in the growth of Middle East liquidity?
Amid geopolitical and macro volatility across the globe, there has been a major influx of capital into the Middle East and Gulf Cooperation Council region — particularly the United Arab Emirates.
Institutional investors and family offices are establishing an onshore presence in the region.
The local and regional banks are strongly capitalised and have access to deep pools of liquidity. More than 6,700 millionaires are expected to move to the UAE alone this year — that’s 70% up since 2023. Together with the cash-rich sovereign wealth funds, this has transformed the GCC region into the world’s newest liquidity and wealth haven.
What kind of investments and asset classes is this liquidity in search of?
The inflow of capital has spurred activity across the region’s capital markets. The Middle East’s IPO boom has bucked the global downturn. We have seen massive oversubscription and competitive listing fundamentals on IPOs for UAE government strategic assets like DEWA, RTA and ADNOC subsidiaries.
In the second quarter of 2024 alone, there were 14 IPOs for a collective $2.64bn — primarily led by Saudi Arabia and the UAE region. We are seeing the primary market evolve with more private companies across sectors reflective of the economy looking to IPO, which in turn is widening the pool of investors looking to invest in the region.
In the debt market we’ve had a record level of activity, underpinned by significant demand from GCC investors. Islamic investor appetite is driving record sukuk volumes, which have reached $37bn year to date, and international entities are also looking at the format to widen and diversify their investor base.
What is the role of Emirates NBD Capital in linking issuers and investors across different parts of the market?
Emirates NBD Capital has been pivotal in channelling its own sizable internal group liquidity, and acting as a gateway on behalf of our international clients.
We have strong distribution capabilities, with access to 850-plus institutional global investors, through a salesforce based in Dubai, Singapore and London.
Emirates NBD also has one of the largest private banking footprints in the region, with a presence in Saudi Arabia, Singapore, London and Turkey.
The group continues to maintain its lead rankings in the local and regional debt capital markets, while rapidly expanding our cross-border franchise. Our growing prominence in global coordinator and bookrunner roles is reflected in our high standings in international league tables.
We are ranked 5th in the CEEMEA USD public bonds and sukuk table, making Emirates NBD the first GCC bank to break into the top 5 and top 10 positions. Our in-depth Sharia structure experience has helped us become a leader in the international sukuk tables.
Are there market segments or geographies where Emirates NBD Capital is seeing particular growth in its debt capital markets operations?
The supportive market dynamics continue to fuel Emirates NBD Capital’s record-breaking run: the platform has raised over $67bn across 98 primary issues and 48 private placements year to date in 2024.
Whilst the GCC remains our core market, we have rapidly enhanced our international presence across Turkey, India, Africa, the UK, US and Europe, piercing the top 5 of the CEEMEA USD Bonds League Tables, the only GCC bank to have done so.
Emirates NBD has been instrumental in channelling robust and competitive Middle Eastern liquidity. We entered the Turkiye debt capital markets in 2013 and have established ourselves as the go-to DCM franchise, ranked second in the Turkey USD Bond League Tables so far in 2024. In the last 12 months, we have successfully led 26 marquee issues, raising over $15bn on behalf of strategic clients.
We also continue to maintain an active presence in the highly competitive Asia DCM space, having led landmark issues and liability management deals in India, on behalf of clients including SBI, HDFC, Axis, Adani, Shriram, Delhi International Airport and JSW Infrastructure.
Emirates NBD continues to grow its prominence in China, primarily across the financial institution and non-bank financial institution space. We are also leveraging Emirates NBD’s onshore presence in London to further expand UK and European DCM coverage, where we recently led a €700m green bond on behalf of CPI Property Group, the first time for any Middle East bank to book-run a CEE commercial real estate deal. We have previously led transactions for other prominent international clients such as Imperial Brands, Aercap and the government of the UK, amongst others.
How are trends like environmental, social and governance (ESG) issues and sustainability interacting with the growing funding opportunities in the Middle East?
ESG mandates are benefiting from increased liquidity. One key driver is the UAE banking sector’s pledge to facilitate AED 1Trn of sustainable finance by 2030. This is complemented by product innovation across the region, where our franchise has played a major role.
We contributed to the ICMA-led Guidance on Green, Social and Sustainability Sukuk and then acted as sole sustainability coordinator on Emirates Islamic’s sustainability sukuk — the first such format from the UAE after the ICMA guidelines release.
Most recently, our franchise supported Emirates NBD in its publication of the first ever sustainability-linked loan (SLL) financing bond framework that is fully aligned to the International Capital Markets Association and the Loan Market Association guidelines.
The instrument allows us to raise funding and redirect it to SLLs for leading clients in Australia, Singapore and many other jurisdictions. Similarly, mirates NBD Capital has been acting as sustainability coordinator in syndicated sustainability loans in new markets like Saudi Arabia and Hong Kong.
Our franchise also supported Ziraat Bankasi’s $1.7bn SLL — the largest and most widely participated sustainability-linked syndicated loan for a financial institution in Turkey.
All this just reinforces how quickly ESG is turning into a mainstream concept in the Middle East and impacting labelled deals globally. The Emirates NBD Capital team looks forward to continuing supporting its clients on the green journey!