MENA Fixed Income: Four Things That Are Top of Mind

Accelerated demand for regional debt suggests a constructive remainder of 2019 for bonds in the Gulf Cooperation Council (GCC), according to Dino Kronfol, chief investment officer, Franklin Templeton Global Sukuk and MENA Fixed Income. He outlines four things that are at the top of his mind for GCC debt in the current economic climate. He also shares why he thinks the MENA region could provide fertile ground for fixed income investors searching for yield.

When it comes to fixed income investing, we think bond markets in the Gulf Cooperation Council (GCC) region deserve much more investor attention than they’re receiving.

We’ve seen the Gulf Cooperation Council (GCC)1 economies take some bold steps to implement both fiscal reforms and diversify economies away from their dependency on oil.

At the same time, the GCC’s phased inclusion in the J.P. Morgan Emerging Market Bond Index (EMBI)2 over the course of 2019 signals to us that the inclusion should lead to a significant increase in investor interest and demand for GCC bonds.

Overall, the evidence suggests GCC debt issuance, which includes traditional bonds and sukuk (Shariah-compliant bonds), is on the rise.

These are exciting developments in what we think was an underappreciated asset class and we remain constructive on GCC debt. Here are four considerations we think could drive GCC debt for the remainder of the year.