x Abu Dhabi, UAETuesday 25 July 2017

Qatar issue is hot ticket in market

The biggest sale from the Gulf has raised $7bn from eager buyers

Qatar capitalised on surging demand among global investors for places to park declining US dollars to sell US$7 billion (Dh25.71bn) in bonds, in what analysts say was the biggest ever bond sale from the Gulf. Qatar's bonds are divided into three maturities, bankers said, including $3.5bn to come due in 2015 which will reportedly pay investors between 1.85 to 1.9 percentage points above the yield on US Treasury bonds maturing the same year.

Another $2.5bn due in 2020 will pay 1.95 percentage points above US Treasuries, while $1bn payable in 2040 will pay a spread of 2.15 percentage points. "It says a lot in terms of demand for this paper," said Chavan Bhogaita, the head of credit research at National Bank of Abu Dhabi. Investors inundated the banks arranging the sale with orders for as much as $30bn, Mr Bhogaita said."For investors outside this region who want to have exposure to the GCC's credit story, Qatar is, alongside Abu Dhabi, the most blue-chip issuer in this region."

The sale caps a year in which bonds have overtaken public offerings and bank lending as the Gulf's primary form of fund-raising. With banks still shaken by the crisis and stock markets still nervous, governments around the region have sold an estimated $30bn in bonds as a way to refinance existing debts and raise funds for development. Low US interest rates, set to help pull the largest economy out of recession, have sparked a boom in demand for higher-yielding investments around the world.

That has enabled even highly indebted borrowers such as Dubai, which last month sold about $1.9bn in Islamic bonds, to return to international credit markets. Qatar's ability to sell so many bonds as well as debt with 30-year maturities, underscores the emirate's high regard among international investors. While Abu Dhabi has among the world's largest known oil reserves, Qatar is endowed with the third-largest known reserves of natural gas.

It has thus avoided the effects of slumping property and oil prices that have hit the UAE and other parts of the region. @Email:warnold@thenational.ae