Oil Price Drop Hurting?
It was interesting to observe Middle East buyers taking up only 2% of the 30 year sovereign Sukuk issued by Malaysia (the 10 year issuance allocation consisted of 24% Middle East buyers). This low take up by Middle East (read Gulf investors) can be read a few ways:
- Sukuk primary subscribers remain hold to maturity investors, and a 30-year note was too long for Middle East buyers to commit to, or they were risk adverse to take a 30 year view on Malaysia.
- The drop in price of oil is hurting and Gulf investors are planning only up to a ten year horizon, perhaps suspecting the growth of shale gas and recent announcements of large discoveries of oil in the UK, as well as green energy growth will make them and energy exporting Malaysia in need of rebalancing their economies.
- With the issuance being oversubscribed and attracting interest of over US$9 billion, Malaysia decided to be give Gulf investors only the shorter term ten year issuance.
- CIMB and Standard Chartered did such a great job of marketing to Asian buyers, whilst HSBC did a less stellar job in the Middle East market where it tends to be stronger.