Bond sales from the Gulf region have slumped to the lowest level since 2008 as the threat of another global recession fueled the steepest surge in the region's credit risk in seven quarters. Sovereign and company debt issuance in the Gulf Cooperation Council countries have totaled $1.54 billion since June 30, the smallest amount since the last quarter of 2008, data compiled by Bloomberg show. The average cost of insuring the Middle East's notes against default jumped 75 basis points in the period to 344 Tuesday, headed for the biggest increase since the three months ended Dec. 31, 2009, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. Emerging market bond funds saw the biggest capital outflows in more than two years in the week to Sept. 21, EPFR Global data show, as Europe's debt crisis prompted investors to exit riskier assets. Last week, the Federal Reserve said there are “downside risks” to the US economy and the International Monetary Fund cut its forecast for 2011 global growth to 4 percent from 4.3 percent. Abu Dhabi's Tourism Development & Investment Co. and Dolphin Energy Ltd. deferred debt sales this quarter. “A lot of issues have been delayed because of the volatility in the markets,” Ahmed Talhaoui, the Abu Dhabi-based head of investment and asset management at Royal Capital PJSC, said Sunday. “And we would probably expect it to remain this way for the foreseeable future.” The cost to protect the bonds of Dubai, which received $20 billion in loans from Abu Dhabi in 2009 to avert defaults by state-owned firms, against nonpayment using credit-default swaps jumped 148 basis points this quarter to 488 on Sept. 27, CMA said. Swap prices for Abu Dhabi added 28 basis points to 123 and those for Saudi Arabia rose to as much as 131.
