Gulf countries are forecast to drive the bulk of 2017 sovereign debt issuance, followed by Latin America, according to Bank of America Merrill Lynch.
Its latest GEMs Macro Monthly report said it expects Saudi Arabia, Argentina, Qatar and Kuwait to be the largest gross and net debt issuers in 2017.
It said these four issuers could account for 37 percent of the total sovereign gross issuance.
Among those, Bank of America Merrill Lynch said it expects Kuwait, with no external sovereign debt, to come to market with about $10 billion to finance a budget deficit resulting from low oil prices.
The report also predicted that the Saudi riyal peg to the US dollar will hold given sizeable foreign assets and the experience with implementing multi-year fiscal adjustments.
On credit ratings in the Middle East, Bank of America Merrill Lynch said it sees risk of further credit downgrades for Saudi Arabia from Fitch if fiscal slippage risk materialises or the drawdown on central bank foreign reserves continues.
It added that it sees Oman’s credit rating risks downgrade to non-investment grade in 2017 if oil prices are low and if twin deficits remain large.