[ Qatar Telecom ]
, also known as Qtel, has tapped capital markets with a US$1billion (Dh3.67bn) 10-year bond as it considers expansion in North Africa.
Qtel priced the bonds with a coupon rate of 3.25 per cent. The new funding will be used for general corporate purposes, including the refinancing of existing debts, said Qtel .
"The combination [of] market demand, long-term financing and attractive pricing levels is a strong indication of the continuing confidence of the fixed income community in Qtel's strategy, financial strength and management," said the company.
The issue was arranged and offered through banks including Barclays, HSBC, Mitsubishi UFJ Securities, Mizuho Securities, Morgan Stanley and QNB Capital.
Qtel's shares fell 1.3 per cent to 101.9 Qatari riyals in trading yesterday.
Qtel has hired JPMorgan to advise on a potential acquisition of Morocco's Maroc Telecom from Vivendi, according to sources close to the company.
Standard & Poor's said in a note earlier this month assigning ratings to the issuance that while the company was operationally strong, recent bond sales could leave it with scant ability to finance planned expansions through new debt.
"The current consolidated leverage leaves limited headroom for more acquisitions, which are possible based on the current definition of the company's financial policy," analysts from the ratings agency wrote in a research note this week.
Middle Eastern telecoms companies have sought to capitalise on disposals by overleveraged European rivals facing difficult trading conditions in their home markets, said Shrouk Diab, an analyst at NBK Capital.
"The Mena region hasn't suffered as Europe has suffered, where spending has been affected," she said. Middle Eastern telecom companies such as Qtel and Abu Dhabi's Etisalat have strong cash balances, Ms Diab added.
"Accordingly they still have that room to grow in terms of financial leverage if they need it," she said. "That gives them much bigger firepower if they want to go ahead and make big acquisitions."
The Arabian Gulf is having its most active year on record for bond sales, with issuances totalling $41.8bn so far this year as global investors seek highly-rated companies with yields above those offered in developed markets.
