Debt capital markets (DCM) in the Middle East have continued to defy the downturn this year with companies looking to bonds to shore up their balance sheets as bank lending evaporates. International investment banks have been the main beneficiaries of this business, and now there are signs they’re willing to expand their teams in this area.

DCM issuance in the Middle East was $21.3bn to 26 August this year, according to data from Dealogic released to Financial News. This marks a 15% uptick on the same period in 2008.

Banks such as Citigroup, Barclays Capital, BNP Paribas, Deutsche Bank, Goldman Sachs and JPMorgan have been the main bookrunners for these deals.

But Gulf debt markets have been booming all year, and this hadn’t translated into new job creation in the first half of 2009. This is changing, says Adam El-Balawi, director, Gulf at headhunters Principal Search.

“We’re seeing a definite uptick in demand for DCM bankers from bulge bracket firms, who are either upgrading their existing staff or expanding their operations,” he says. “This is for anything from associates through to directors and managing directors. The problem is, though, there’s still a very limited talent pool available within the MENA region.”

Peter Greaves, director of financial markets at executive search firm McArthur Murray, says the holy month of Ramadan has meant a lot of hiring plans have been briefly stalled.

“We’re anticipating a number of investment banks picking up recruitment activity in October,” he says.

Equity capital markets, by contrast, have been relatively barren this year. However, it’s expected that levels of initial public offerings (IPOs) will pick up after Ramadan amid tentative signs of recovery on Gulf stock markets.

“Institutional investors are starting to again take more interest in the region as valuations … relative to other emerging markets, look more enticing,” Michael Bevan, HSBC’s head of equity capital markets in the Middle East and North Africa told Reuters.