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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 our latest 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 November, MUFG was involved in the following prominent capital markets transactions:

• MUFG acted as Joint Lead Manager and Bookrunner on the USD750m Perp NC5.5 AT1 Sustainable Sukuk offering from the Saudi Investment Bank (“SAIB”). The transaction was an outstanding success, as illustrated by multiple milestones and achievements:

1. Securing the largest order book for an AT1 issue from the GCC in 2024, in excess of USD5bn (6.7x oversubscribed);

2. Healthy moves from IPTs to final landing levels of 50bps; and

3. Attracting strong interest from international investors with some core non-GCC asset managers following the aggressive tightening.

MENA market perspectives

• Fiscal prudence and pragmatic debt management will cap financing requirements in Saudi Arabia. The 2024 expected budget outturns presented in the 2025 Saudi Budget statement last month signal a marked degree of fiscal discipline exerted in the latter half of the year. This welcome spending restraint is likely to continue into next year as government oil revenues, which still account for over 60% of the total, will remain subject to considerable uncertainty. With revenues forecast to remain flat (we assume production increases next year will be offset by a decline in the average oil price to USD73/b (see here), this implies a widening of the deficit to -3.2% of GDP next year. The fiscal deficit does imply a rise in the government funding requirement of USD37bn next year, all else equal. Given the ample fiscal space available to the sovereign (high fiscal reserves and low debt/GDP levels), this is not a credit quality concern, though it does point to potentially higher borrowing in capital markets, both domestic and external.

• Egyptian Pound remains well-supported in 2025 but risks of further depreciating are rising. Following the last devaluation in March 2024, the Egyptian Pound (EGP) has fared broadly well against the US dollar (USD), when benchmarked against other EM currencies. While this inevitably raises questions regarding the extent of support the EGP is receiving directly or indirectly from the Egyptian monetary authorities, we view the currency’s stability has helped temper inflationary pressures and reduce capital account volatility at a time of heightened regional geopolitical uncertainty. Having said this, the EGP has been on a steady depreciating path since the summer and recently breached the psychological threshold of 50 EGP/USD. Disconcertingly, pricing of the 12 month forward currency contract is also on the rise, suggesting investor expectations of a further depreciation in the months ahead.