Is the Shareholder Everything?
1 February, 2016
Global Capital Middle East Report: Rich States Adjust to Harsher Climate as Oil Keeps Flowing
29 February, 2016Global Capital, February 29 2016
The Middle East is facing a liquidity crunch as a number of factors — from the tumbling oil price, to shrinking deposits, and bearish emerging market sentiment — conflate. But it is not playing out quite as expected, with the result that the regional bid is, if anything, more important than ever at home, and increasingly influential
internationally.
It’s easy to demonstrate that the low oil price has drained money from the region. “There’s an undeniable correlation between the price of oil and regional liquidity,” says Andy Cairns, managing director and global head of debt origination and distribution at National Bank of Abu Dhabi (NBAD). “With oil down from over $100 a barrel in June 2014 to $31 today, regional liquidity is correspondingly reduced.”
This has a number of knock-on effects. One is that governments, keen to maintain social spending and infrastructure development, need money. They can get some of this by drawing on their sovereign wealth funds, or withdrawing deposits from the banks, but increasingly they are looking to the markets for fundraising as well.
This is the supply side of the crunch. One early illustration came when Saudi Arabia raised the
equivalent of $27bn in riyals in a series of issues through the second half of 2015, having previously been absent from the market for years. It is likely to be followed by international deals.
Read the whole article here: http://www.globalcapital.com/article/wn4rdj1qcnsb/regional-bid-holds-up-as-internationals-turn-away
