Barclays upbeat on GCC credit - IFN

Barclays upbeat on GCC credit

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GLOBAL: Barclays Bank’s quarterly analysis on emerging markets, which includes the GCC, states that GCC credit looks to remain well supported by strong balance sheets and ownership support by local investors. The bank also opines that investor concerns regarding the global liquidity crunch will not encompass the GCC, as the market takes a more positive view towards the GCC credit space. “In the GCC senior bank bond/Sukuk space, Qatar National Bank is one of our top picks as it offers a decent pickup over the sovereign, and looks attractive relative to its peers, in our view,” the bank said. “We think that ADIB (Abu Dhabi Islamic Bank) tier-1 perpetual Sukuk offers an attractive entry level: ADIB has a strong credit profile and would very likely benefit from Abu Dhabi government support, should the need arise,” it added. The Emerging Markets Quarterly Report also added that sustained credit growth remains a key driver of non-oil growth, despite witnessing some regional slowdown in the past few months. “Credit to the private sector averaged 39.1% year-on-year in Qatar during the first four months of the year, down from 58.3% year-on-year during the same period last year. In Saudi Arabia as well, the monthly average remains at 15.7% year-on-year,” said the report. In Qatar and Saudi Arabia, strong growth was recorded in both public and private sector deposits as moderating credit growth led to an easing in loans to deposits ratios. In the UAE, Barclays observed that the more prudent approach currently taken by banks in terms of disbursing credit has helped to improve liquidity in the emirate. “In Dubai, the large exposure of most banks to sovereign-related entities, and ongoing restructuring, will likely see banks stay on the sidelines, despite a resurging demand for mortgage lending and accelerated recovery in the real estate sector,” it said. The residential investment sector in Saudi Arabia is also expected to accelerate following the implementation of new mortgage lending regulations approved in May.