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Middle East chief financial officers are very optimistic compared to their counterparts in the West, according to the latest Deloitte global CFO survey.
Although the general level of optimism dipped slightly, from 55 per cent to 52pc compared to the first quarter survey, this is still quite high compared to the general level of optimism among CFOs in Western countries such as the UK and those in North America.
"This feeling of optimism is reflected in the region generally with plans for growth moving ahead and GDP expected to continue to increase in the coming year," said James Babb, partner and CFO Programme Leader for Deloitte.
"This positive climate is being supported by strong spending on infrastructure development from the region's governments, underpinned by resilient oil prices," he said.
CFOs are now significantly less risk averse than any time in the past year. A net balance of 43pc think now is a good time to take greater risk onto their balance sheets, compared to 36pc in the first quarter of 2010 and 27pc in the third quarter of 2009.
Additionally, companies are not planning to reduce spending and investment as aggressively as they did in the previous quarters.
The survey shows that CFOs have become much more positive about debt levels and their repayment ability. Only 29pc of CFOs now think Middle Eastern companies are overleveraged compared to 42pc in the first quarter of 2010.
Despite a slight fall, bank borrowing continues to be the most attractive source of financing for CFOs. About 41pc rate bank borrowing as attractive, compared to 28pc for equity issuance and 26pc for corporate bond issuance. There has been a sharp rise in the attractiveness of the latter, increasing from 10pc to 26pc.
Two-thirds of the CFOs plan to raise financial leverage over the next 12 months and are likely to issue debt or arrange new facilities in the coming year. The majority are positive on mergers and acquisitions in the next 12 months.
