Capital Raising in the Arab World

Soha Ismail (), Juan Lorente and Sergio Schmukler
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Soha Ismail: The World Bank

No 1095, Working Papers from Economic Research Forum

Abstract: This paper provides a first documentation of how firms in Arab countries use equity, corporate bond, and syndicated loan markets to obtain finance. We compile a large dataset at the transaction-level of issuance in domestic and international markets over the 1991-2014 period. The analysis focuses on 12 Arab nations, but covers 719,242 transactions from 96 different countries. We find that while the total amounts raised, relative to GDP, in equity and syndicated loan markets stand relatively well with respect to other regions in the world, corporate bond issuance activity lags behind. Yet, corporate bond financing as a share of total debt has gained relative importance over time. Arab debt displays very long maturities at issuance, which is driven by larger shares of bonds and loans issued for infrastructure and long-term investment purposes than other regions in the world. Corporate bonds in Arab countries also involve large deal sizes and hold low levels of credit risk. Whereas equity issuances primarily take place in domestic markets, Arab bonds and loans are mostly issued internationally.

Pages: 34
Date: 2017-18-05, Revised 2017
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