Gulf spreads may fall as Trump favours Iran sanctions over attack

Bloomberg

Investors in Gulf assets breathed a sigh of relief after US President Donald Trump showed restraint against Iran.
Calling off airstrikes and opting for additional sanctions on Iran eases the risk of military combat between the Persian nation and its Arab neighbours, and will probably have a positive impact on GCC spreads, according to Arqaam Capital Ltd.
“While GCC bonds have continued to rally despite the uncertain geopolitical environment, they have under-performed em-erging-market peers,” said Du-bai-based Abdul Kadir Hussain, the head of fixed-income asset management. An easing of geo-political risk “may also mean that issuers like Oman that have been waiting for a toning down of political rhetoric might use the opportunity to issue,” he said.
Gulf sovereign spreads have declined about 20 basis points since early June, less than half the drop for emerging markets, according to JPMorgan Chase
& Co. indexes.
The region has been churning since the US withdrew a year ago from a landmark 2015 nuclear deal meant to prevent Iran acquiring a
nuclear weapon.
Tensions spiked in May when four ships were targeted off the coast of the UAE.