Commercial Bank of Qatar increases bond issue to $1.6bn

10 November 2009

Institution aims to improve financial strength

Commercial Bank of Qatar (CBQ) is raising $1.6bn debt from a $1bn five-year bond and a $600m 10-year bond to improve its Tier-2 capital ratio. This is a key measure of the bank’s financial strength.

The bank priced the five-year bond at 250 basis points above the London interbank offered rate (Libor) mid-swap rate, mid-point between bids and offers on interest rate contracts, and the 10-year bond at 400 basis points above the mid-swap rate.

On 4 November, when it started its roadshow for the bonds, CBQ told potential investors it only wanted to raise $500m from debt markets.

CBQ plans to complete both bond issues before the end of November.

Qatar’s government is also considering issuing a $5bn bond before the end of 2009. It has appointed five banks to manage the issue. They are the UK’s Barclays, the US’ Goldman Sachs, JP Morgan Chase also of the US, Qatar National Bank, and Swiss-based Credit Suisse.

“The pipeline of bond issuance shows that the governments of the region are keen to develop their debt markets. There is particularly a lot of interest in the Qatari growth story from international investors,” says a UAE-based fixed income trader.

Abu Dhabi-based First Gulf Bank will launch a roadshow for a $500m bond issue on 12 November, according to bankers close to the deal.

The roadshow will visit potential investors in Europe, the UAE and the US. First Gulf is raising the money to help fund new lending.

First Gulf has appointed France’s BNP Paribas, the UK’s HSBC, Deutsche Bank and the US’ Citigroup to act as arrangers on the deal.

Emirates NBD is busy holding its own roadshow of international investors to gauge interest in any potential bond issue, although the bank has yet to decide whether to issue a bond.

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