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Qatar discussing idea of dollar bond with market, no decision

From Reuters, October 9, 2017, by Davide Barbuscia.

DUBAI, Oct 9 (Reuters) – Qatar has been discussing with banks the idea of issuing an international bond this year, but no decision has been made yet, a Qatari finance ministry official told Reuters on Monday.

Regional and international commercial bankers confirmed that the Qatari government had been asking banks how a potential dollar bond issue might be received by the market.

They said discussions were in the nature of regular contacts which many governments maintain with the market to gauge their fund-raising options, rather than preparatory talks for an issue.

Qatar issued a $9 billion bond in June last year with maturities of five, 10 and 30 years. The bonds were yielding 2.9 percent, 3.5 percent and 4.4 percent respectively on Monday, Thomson Reuters data showed.

But the country’s access to the international bond market has been complicated by the decision of Saudi Arabia, the United Arab Emirates, Bahrain and Egypt to cut diplomatic and transport ties with Qatar in June this year. The four states accused Doha of supporting terrorism, which Doha denies.

“Logic would dictate that the government would have to pay some premium” for the current political uncertainty, said a debt capital markets banker at a Qatari bank.

“The investor base that they had in 2016 would not be the same – some accounts would not be there for sure, but global demand for Middle East is high,” he added.

Qatar’s potential deal would follow Saudi Arabia’s $12.5 billion bond in September and Abu Dhabi’s $10 billion bond earlier this month. Both the deals were heavily oversubscribed, receiving a combined demand of around $70 billion.

Given the high level of global demand, Qatar might only pay a premium of as much as 10 basis points over its last issue, a banker at an international bank said.

Qatar’s international reserves and foreign currency liquidity fell sharply after the sanctions were imposed, but partially rebounded in August, official data showed last week.

Bankers said this may have been the result of a liquidity injection into the reserves by Qatar’s sovereign wealth fund, which has enough money to support the balance of payments for years. (Additional reporting by Tom Arnold in Dubai and Sudip Roy in London; Editing by Andrew Torchia/Jeremy Gaunt).


Country: Qatar
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