August 2009 JEDDAH - (Gulf Cooperation Council (GCC) bonds and Sukuk volume reached $18.4 billion in the first half of 2009, an increase of 37 percent compared to the same period last year, Kuwait Financial Center S.A.K. (Markaz) said in its latest report on bonds. The increase was fuelled as a result of new issuances by either sovereign or corporations that are fully or largely owned by the governments, which together represented 92.1 percent of the total issuance during the period. However, H12009 volume was lower than half, 38.3 percent, of the total year volume peak of 2007. The month of April predominated in terms of issuance frequency and value with 13 issues raising a total of $8.9 billion, representing respectively 29.5 percent and 48.7 percent of total H12009 issuances. Continuing with the trend witnessed since 2003, conventional issuances raised the greatest amount during H12009 with $17.3 billion representing 93.9 percent of the total value raised through 32 issues, compared to $1.1 billion for Sukuk through 12 issues. It is interesting to note that all of the Sukuk issuances raised during H12009 were sovereign Bahraini issuances, except for one which was issued by the Saudi Arabia-based Dar Al-Arkan Real Estate Development Company in May. During H12009, sovereign issuances dominated the majority of the amount raised, raising $12.7 billion with a 69.0 percent share of the total volume; continuing with the trend observed since 2003 except for the peak years of 2006-2007, in addition to 2008, where corporate issuances dominated the market. Of the $5.7 billion raised by corporations, 74.6 percent was raised by corporations that are either fully or largely owned by governments. The remaining amount was raised by Dar Al-Arkan Real Estate Development Company and Aldar Properties PJSC; nonetheless, 26.3 percent of the latter is owned by government entities. In aggregate, sovereign issues totalled $12.7 billion. Excluding sovereign issues, only three sectors were active in the issuance of bonds and Sukuk during H12009: real estate sector, financial services sector and telecom sector. Unlike the trend that has been witnessed since 2003, where the financial services sector consistently issued the greatest number and raised the largest amounts annually, the real estate sector in the H12009 ranked first raising the largest amount with $2.45 billion, or 43.0 percent of the aggregate corporate bond market, through three issues. The financial services sector ranked second raising $1.75 billion, representing 30.7 percent of the aggregate corporate bond market, followed by the Telecom sector with $1.5 billion. Since 2003, there has always been an issue placed by both the real estate and fnancial services sector; however, the first telecom bond issuances to occur in the GCC was placed during H12009 by Qatar Telecom. Continuing with the trend witnessed since 2006, the UAE garnered the majority share of amount issued, raising $6.0 billion, or 38.1 percent of the total amount. Next was Kuwait, raising $5.8 billion, 31.3 percent of the aggregate amount raised; Qatar ($4.5 billion) and then Bahrain ($0.92 billion). In terms of the number of issues, Kuwait garnered the majority share of the number of issues, with 22 issues representing 50.0 percent of the total issues; followed by Bahrain with 11 issues, representing 25.0 percent of the total number of issues. Saudi Arabia was the least active among the GCC issuers with only one issue raising $0.20 billion; however, Saudi-based Saudi Electricity Company launched and sold a Sukuk, but did not close the books nor issue the Sukuk, during the last week of H12009. Oman did not have any issues during H12009. The first half of 2009 witnessed the highest volume raised by both sovereign and corporate Qatari issues, $4.5 billion. The amount raised represents 44.8 percent of the aggregate amount raised by the Qatari government and corporates from 2003 to 2008 which totalled $10.0 billion. The aggregate bond issuances during H12009 had tenors ranging from three months for the Kuwaiti and Bahraini treasury bills to 10-year bonds. Average tenor for the H12009 issues decreased to 2.244 years from the 2008 average tenor of 2.918 years. During H12009, issuances with five year maturities raised the highest amount, $D8.85 billion, representing 48.2 percent of the aggregate amount raised. Issues with three month and six month maturities had the largest number of issuances with 11 issues each, raising $1.45 billion $1.13 billion respectively. The issues with one year maturities had the second largest number of issues with a total of 10, raising $3.32 billion. The 10-year maturity issuances were the least active segment during H12009 but raised the second highest amount with $3.6 million through four issues. The bond and Sukuk issuances during H12009 had sizes ranging from $13.27 million to $2.0 billion. Unlike the past two years, where issues with a principal amount equal or less than $100 omar 1.1:zy