COVID-19 Market Update
- While JPMorgan has been trying to ditch the discount loans it holds from Gulf sovereign wealth funds (notably, Saudi Arabia’s and the UAE’s) as prices crash and demand crumbles, the UAE is gearing up for its own bond sale, hot on the heels of Qatar’s. And given the situation, investors will get a premium, if they’re willing to take the risk. Qatar was the first to recently test investor appetite for the region’s debt with a $10-billion bond sale on Tuesday. A day later, Abu Dhabi launched its own cash raise, with initial prices giving investors a premium of around 70-80 basis points over existing bonds. On Wednesday, Abu Dhabi sold $7 billion in bonds.
- Back in Saudi Arabia, all those Aramco bondholders are wondering what comes next. The $12 billion in bonds they hold recorded an 8.2% loss in March, and they are likely to remain under intense pressure in April and May.
- After soaring to great heights last week, supertanker rates fell this week as the market held its breath over the virtual OPEC meeting, avoiding new bookings until the outcome of that meeting was made clear, based largely on the assumption that there would be a scale-down of Saudi seaborne exports following an agreement. The VLCC market for the Middle East-China route saw rates slashed in half this week, from their high last week over anticipated production cuts that are not yet forthcoming.
- The US Congress rejected a plan to…