Qatar Is Said to Plan Raising at Least $9 Billion From Bond SaleBy and
Gas-rich Gulf country aims to match May 2016 debt offering
Qatar’s issuance would follow sales by Abu Dhabi, Saudi Arabia
Qatar is considering raising at least $9 billion from international bond markets as the gas-rich nation boycotted by its neighbors seeks to replenish state coffers, people familiar with the matter said.
Government officials are in talks with banks to decide on the best time for a possible sale, the people said, declining to be identified because the talks are private. The bond is likely to be in line with or more than Qatar’s last issuance of $9 billion in 2016, they said.
Qatar, whose debt carries the fourth-highest investment grade at S&P Global Ratings, will target investors in Asia, the U.S. and Europe to make up for a shortfall of regional investors, the people said. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic relations and closed transport routes with Qatar on June 5, accusing it of funding terrorism, a charge it denies. Some banks in those countries have since cut their exposure to Qatar.
The finance ministry and government communications office didn’t respond to requests for comment.
“Investor interest for Qatar exposure from within the region will be subdued,” said Doug Bitcon, Dubai-based head of credit strategies at Rasmala Investment Bank. “However, there will be demand from international investors out of the U.S., Europe and Asia, particularly if an attractive new issue premium is on offer.”
The yield on Qatar’s dollar bonds due 2026 rose five basis points, the most in three months on a closing basis, to 3.51 percent as of 12:10 p.m. in Doha, according to prices compiled by Bloomberg.
Oil-exporting countries across the region are tapping debt markets to bolster public budgets after crude prices slumped. Abu Dhabi raised $10 billion last week, following a $12.5 billion sale by Saudi Arabia.
Qatar, the world’s largest exporter of liquefied natural gas and OPEC member, “may have to pay similar levels to Saudi Arabia despite stronger fundamentals on paper and a better rating,” said Trieu Pham, a credit-strategy analyst for emerging markets at MUFG Securities in London. A successful offering “would likely open the market for Qatari banks and corporates.”
Qatar is said to be telling its banks to tap international investors to raise financing, instead of mainly relying on government funding. Qatar National Bank QPSC, Commercial Bank QSC and Doha Bank QSC are among lenders considering options that include loans, private placements or bonds, people familiar with the matter said in August.
The Saudi-led boycott is weighing on Qatar, with economists expecting gross domestic product to grow at the slowest pace since 1995. The country is also preparing to host the 2022 soccer World Cup and is spending $200 billion to build infrastructure.
Qatar pumped almost $40 billion to support the economy and financial system in the first two months of the standoff, Moody’s Investors Service said. The Qatar Investment Authority, which has reduced its direct holdings in Credit Suisse Group AG, Rosneft PJSC and Tiffany & Co., is considering selling more of its $320 billion of assets, which includes stakes in Glencore Plc and Barclays Plc, and channeling the proceeds into its home market, people familiar with the matter said this month.
— With assistance by Mohammed Sergie