Algebra Capital has launched of its fixed income business with the opening of the Beta Mena Fund.

Targeting $300 million, this fund is the first to focus on Mena corporate credit and local currency markets, the company said in a statement.

Aiming for absolute returns above 10 per cent, the fund should deliver returns above average regional inflation rates, and will initially be offered in UAE dirhams and US dollars, later expanding to include Saudi Arabian riyals and Qatari riyals.

“This fund will be the first to take advantage of the $100bn corporate debt market in the Middle East and North Africa region, offering GCC and international investors a unique opportunity to benefit from the region’s improving credit profile and developing local currency bond markets,” said Algebra Capital managing director Mohieddine Kronfol.

“Mena debt, which is of investment grade quality, has historically performed well, delivering consistent returns with very low levels of volatility and virtually no defaults,” he said.

“The amount of Mena debt created annually is approaching $200 billion and expected to rise further. Our estimates for 2008 include $95 billion in new bond issuance, 50 per cent of which will be corporate. Sukuk issuance could approach $30 billion in 2008, doubling the region’s outstanding Sukuk aggregate,” said Kronfol.

“With regional debt issuance growing at north of 50 per cent and set to continue, prospects for increased primary market activity and secondary market depth and liquidity continue to improve,” he added.

“The launch of the Beta Mena fund is a milestone for Algebra Capital as it also signals the launch of our second line of business, fixed income asset management, an area of strategic importance to our firm” said Algebra Capital founder and chief executive officer Ziad Makkawi.

“The Mena region is in the midst of a positive credit cycle making it an increasingly attractive target for regional and international investors,” he said. – TradeArabia News Service