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DOHA: The development of a debt market in Qatar and across the Gulf Cooperation Council (GCC) countries would strengthen the position of asset managers and enable them to better serve their clients, Investment Company Amwal’s CEO George Shehadeh said here yesterday.
The continued development of a debt market, currently a topic of much debate, requires regulatory reform, led by well-drafted and consistently-applied bankruptcy and restructuring laws across the GCC. The sovereign issuances could play in helping Qatar to develop a local debt market.
“Sovereign issues are a critical icebreaker for debt markets as they help establish the local ‘risk-free’ benchmark as well as a yield curve that can stretch into longer dated maturities. We are seeing increasing interest from investors in a variety of debt and debt related instruments .The traditionally “equity-biased” investors in the region are ready to support a broader debt market”, Shehadeh said while talking to the Global publishing, research and consultancy firm Oxford Business Group (OBG).
The CEO played down concerns that Qatar relied too heavily on banks for funding, saying that although the sector required the bond/sukuk market to expand, the underlying legal and regulatory framework also needed to be given time to mature. “Qatar’s reliance on bank funding is not unusual,” he said. “Most markets begin with a much deeper bank funding market than the bond market, with ‘disintermediation’ gradually making its way in.”
Shehadeh highlighted the progress Qatar had made in driving forward its fledgling financial services sector, saying the setting up of the Qatar Financial Centre (QFC) as a centre of excellence with a focus on building a regional asset management hub is instrumental in helping the industry to develop. He also praised the current move towards regulatory consolidation, saying that markets like Qatar, which were in the early stage of development, had much to gain from simple, unified and consistent regulation.“These measures will achieve an improved risk profile and increased operational efficiencies that ultimately benefit investors and the industry as a whole,” he added.