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* MidEast investment bank fees up 11 pct up to end-Sept
* Bonds, shares sales, M&A to drive 2017 activity
By Tom Arnold
DUBAI, Dec 20 (Reuters) - A Middle Eastern investmentbanking fee bonanza should extend into 2017, spurred by acombination of bond and share sales and mergers and acquisitionsas the region adjusts to lower oil prices, bankers say.
Deals such as Saudi Arabia's $17.5 billion debutinternational sovereign issue and the sale of a majority stakein retailer Kuwait Food Co (Americana) to Gulf-basedAdeptio have helped banks' earnings, off-setting falls in otherregions due to economic uncertainty and volatile markets.
Fees from the Middle East reached $581 million during thefirst nine months of 2016, an 11 percent rise compared to thesame period in 2015, according to Thomson Reuters data, whileglobal fees for these services fell 11 percent to $60.9 billion.
JPMorgan Chase & Co, HSBC and Bank ofAmerica Merrill Lynch are among the banks that have beenmost active in Middle East in 2016 and expect more in 2017.
"Next year could also be good. Five or six GCC (GulfCooperation Council) states will have to issue debt and theydon't need a long lead time as they've issued before," SjoerdLeenart, JPMorgan's senior country officer for Middle East,Turkey and Africa, said in emailed comments.
Bahrain, Saudi Arabia, Oman, Abu Dhabi, Kuwait and Qatarcould press ahead with new bond issues in 2017 as they seek tofill budget deficits caused by low oil revenues.
With the outlook for prices improved by OPEC's move tocurtail oil output, borrowers in the region are likely to usethe opportunity to fill their coffers.
"We expect the strengthened commodity fundamentals to createa good window for issuers in early 2017," Matthew Wallace,HSBC's head of global banking, Middle East and North Africa,said in emailed comments.
Coupled with the region's growing financial markets and theuse of financing arrangements ranging from partialprivatisations and non-core divestments to Asian privateplacements to structured commodity-based financings, this willdrive further activity, Wallace predicted.
Borrowers such as Emirates NBD and Al Hilal Bank have turnedto private bond placements to access liquidity discreetly. Thedrying up of cashflows due to lower oil prices has also spurredappetite for structured finance, particularly among oil firms.
While estimates for debt and equity raising in 2017 aretricky to calculate due to market uncertainty, analysts expectmore corporate bonds in 2017 than 2016 as recent sovereignissues create a pricing benchmark, while banking sources saymore companies are weighing initial public offerings.
Bankers are also predicting more M&A, with the merger ofNational Bank of Abu Dhabi and First Gulf Bank to form one ofthe largest banks in the Middle East and Africa set to complete.
Wadih Boueiz, managing director and co-head of corporate andinvestment banking for MENA at Merrill Lynch International, partof Bank of America Merrill Lynch, said he is optimistic of moreopportunities in 2017 following a change in mindset amongcompanies in the region in 2016.
"2016 has seen substantial instability which has pushedcompanies back to the drawing board to consider alternativeoptions like merging or divestment," he said in an email. (Editing by Alexander Smith)
