Raed Momani, head of the Asset and Assets Management Department at Capital Investments, said that the beginning of this August witnessed a strong rise in bond yields for developed countries in the world due to high inflation, an increase in debt issuances, and expectations of an increase in them from the US government, with plans to increase debt rates.
He added, in an interview with Al-Arabiya, that what happened during the current week was that revenues rose significantly and were waiting for the Jackson Hole meetings tomorrow, but it is noteworthy that the PMI producer price index rose, which shows that price trends and inflation will rise.
He pointed out that the turnout was somewhat strong yesterday for an auction of US Treasury bonds for a period of 20 years, which helped lower the returns on US Treasury bonds, and today we see stability, and we are waiting for what Jerome Powell, the US Federal Reserve Governor, can say, and do you believe the expectations of the continuation of high interest rates The second topic of discussion among analysts is whether the world and America can afford to live with high interest rates for a long time in the coming years.
He pointed out that the yields on Japanese bonds for a period of 10 years are also high, in 2016 they were about zero percent, and now they are near 0.68 percent, and this is a factor affecting US bonds.
He pointed out that the first half of this year witnessed good debt issuances higher than the corresponding period last year in the Arab region, despite the high interest rates.
He continued, “Before the turmoil and interest increase occurred in late July and this August, we had two expected issuances from Gulf institutions, and after the interest rose, these issuances stopped, which means that the occurrence of any market turmoil makes the party that wants to issue bonds retreat.”
Momani said that the rise in interest rates did not actually affect companies or governments to issue bonds in the Middle East or the Gulf Cooperation Council in particular.
He stated that the volume of issuances was approximately 150% higher, since the beginning of the year until now, despite the high interest rates, with the increasing opportunities for the rise of the secondary market for debt issuances in the region.
He stated that the “Bloomberg” index for bonds of the Gulf region, we see its performance negative since the beginning of the year compared to the rest of the world is positive, as this is a stimulating and positive indicator for investment in Gulf bonds.
He added that comparing Saudi bonds with bonds of other countries that have the same credit rating, we find that the Kingdom is cheaper than them, in the sense that it gives a higher return, although it has a better credit rating than those countries.