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Long a key feature of the Middle Eastern bond market, the Gulf premium is fading and may vanish entirely as soon as this year if the region continues to gain ground as a mainstream investment destination.The premium is the markup that issuers in the Gulf have to pay over developed-country issuers when they sell similarly rated paper. It has existed since the birth of a significant flow of international bonds from the Gulf about a decade ago.It has been narrowing steadily over the past couple of years as the Gulf's bond market has deepened and foreign portfolio investors' concerns about the region have eased somewhat. In recent weeks, the premium has almost disappeared – and some think it could do so entirely.This left foreign investors hungry for yield and willing to bid up the prices of Gulf bonds in a way they had not done before.
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