Global market keen on higher GCC exposure: IIF

Global market keen on higher GCC exposure: IIF

Low indebtedness and substantial financial buffers, notably in Qatar, Kuwait and Saudi Arabia, have instilled confidence in international markets to enhance the exposure to the Gulf Co-operation Council (GCC), according to a Washington-based economic think-tank.

"The international market is still keen on GCC exposure," the Institute of International Finance (IIF) said its latest report.

Low debt-to-GDP (gross domestic product) ratios and "substantial" financial buffers in Kuwait, the UAE, Qatar, and Saudi Arabia give confidence to investors to gain exposure, it said.

Furthermore, the GCC countries are offering relatively higher risk premia against other emerging economies to attract investors, it said.

The monetary policy tightening in the six GCC countries will push yields even higher on foreign borrowing, according to the IIF.

"We see a sharp increase in corporate (banks and nonbanks) issuance in the second half of this year due to a large refinancing need from loans and bonds that are expected to mature this year," it said.

The report said the impact of tighter US monetary conditions on the GCC banks will also be limited in an environment of high oil prices.

At current elevated oil price levels, the impact of tighter monetary policy in the GCC on non-oil real GDP growth will be