ABSTRACT
The Arab bond markets are still in their early stages of development, with the value of issues outstanding not exceeding $120 billion, mostly in government debt instruments denominated in the local currencies. The bond markets in the region are likely to gain added depth and versatility in the coming few years as the need increases for long-term capital borrowed at a fixed rate to spend on infrastructure and as international investors seek higher yields from newly emerging markets. This will complement the region's fast developing equity markets and provide a fresh source of financing for private and public projects. It will also encourage the creation of new risk management instruments such as interest rates futures and options, while adding to the scope of central banks to conduct monetary policy through open market operations.
