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MENA Monthly Compendium

EHSAN KHOMAN
Head of Commodities, ESG and
Emerging Markets Research –
EMEA
DIFC Branch – Dubai
T:+971 (4)387 5033
E: ehsan.khoman@ae.mufg.jp

SOOJIN KIM
Research Analyst
DIFC Branch – Dubai
T: +44(4)387 5031
E: soojin.kim@ae.mufg.jp

MUFG Bank, Ltd.
A member of MUFG, a global financial group

MENA Monthly Compendium

We are pleased to share in the link above our inaugural MUFG MENA monthly compendium which aims to organise and highlight the array of themes surrounding the MENA region, from standalone thought leadership research, market developments and events to MUFG’s involvement on MENA related transactions as well as broader activities.

MUFG’s leading MENA regional financing for our clients

In September, MUFG was involved in the following prominent capital markets transactions:

• MUFG acted as Joint Lead Manager and Bookrunner as well as Joint Green Structurer on the USD1.75bn 7-year long 12-year Green 144A/RegS bond offering from Abu Dhabi National Energy Company PJSC (“TAQA”).

• MUFG acted as Joint Bookrunner on the USD 5 and 10 Year Sukuk Offering from Saudi Arabian Oil Company (“Saudi Aramco”).

MENA market perspectives

• Assessing the implications of lower US rates on GCC banks. Middle East banks have been one of the biggest beneficiaries of rising rates within the global emerging market banks space given access to a sizable non-interest-bearing deposit base while loan books are predominantly floating rate in nature. Yet, in today’s looming lower interest rate environment, we believe the reverse could be true, i.e. regional banks with a tilt towards a sizable interest-bearing deposit base and fixed rate loan book could outperform. Running a sensitivity analysis to a 50bps rate cut based on banks’ net asset repricing position over a 3 and 12 month period to gauge outperformers, Qatari / UAE banks stand out as more resilient than Saudi banks given interest bearing deposits comprise ~65/50% of total deposits and will reprice down in a lower rate environment to offset the impact from asset repricing.

• Saudi Arabia unveils its pre-budget 2025 statement. Middle East banks have been one of the biggest beneficiaries of rising rates within the global emerging market banks space given access to a sizable non-interest-bearing deposit base while loan books are predominantly floating rate in nature. Yet, in today’s looming lower interest rate environment, we believe the reverse could be true, i.e. regional banks with a tilt towards a sizable interest-bearing deposit base and fixed rate loan book could outperform. Running a sensitivity analysis to a 50bps rate cut based on banks’ net asset repricing position over a 3 and 12 month period to gauge outperformers, Qatari / UAE banks stand out as more resilient than Saudi banks given interest bearing deposits comprise ~65/50% of total deposits and will reprice down in a lower rate environment to offset the impact from asset repricing.