The potential for debt markets’ growth in MENA

The MENA’s debt capital markets have not yet been utilised to their full potential, and have ample space to grow in the coming days.

The financial markets of the MENA region are in a stable condition, owing to large scale deposits in banks and a growing interest in the debt and equity markets. However, the independent debt capital markets still constitute a very small portion of the overall financial markets. Thus, they have a huge potential to grow in the coming years and become a dominant source of funding for the private sector.

For the uninitiated, the debt capital markets trade in such securities as Commercial Papers, Government Treasury Bills, loans and bonds. The markets are split into two: Primary and Secondary Bond Markets.

Why have strong debt markets?

A robust debt capital market increases the effectiveness of private and public companies that seek non-traditional funding sources for their various objectives. At the same time, they strengthen the monetary policies laid down from time to time by the Governments in the MENA region. The stronger the debt and equities markets, the more developed the market operations become, primarily by facilitating higher access for both private and public entities.

Market stability is also an important factor in the process; it promotes better development and sectoral stability as well. Hence, a more robust fixed income market is more stable and resistant to swings in market forces. Besides, it offers more diversification to investors and borrowers.

The debt capital markets can play a crucial role in developing the private sector growth by helping to channelise resources better. They can also be an interesting counterpoint to the traditional bank loans that Governments seek for their own public works projects in the region. Regular issuances and steady benchmarks in the debt markets can go a long way in strengthening revenue flows in the coming days.

Partnering with the right advisors

The debt capital markets departments of the most reputed investment and trade advisory firms in the region have their work cut out across sectors. They are entrusted with the correct placement of debt in the region, and to arrange fixed income securities for companies looking to expand operations here. Partnering with these companies ensures that one receives timely advice to tap into the many opportunities that the MENA region presents.

It is wiser to partner with firms that have a large investor base and an equally large network that can be leveraged to provide the best debt placement opportunities in the region. These firms help companies and private investors raise both conventional and Islamic funding, in line with their business objectives.