Qatar launches $9bn triple-tranche bond deal

26 May 2016

Gas-rich Gulf state may use funds to help finance growth and plug budget deficit

Qatar, the top liquefied natural gas (LNG) exporter in the world, is raising $9bn through a triple-tranche bond deal.

Qatar, one of the six members of the GCC economic bloc, launched $3.5bn five-year notes at 120 basis points (bps) over US treasuries, a $3.5bn 10-year tranche at treasuries plus 150bps, and a $2bn 30-year tranche at treasuries plus 210bps, according to UK news agency Reuters, which cited a lead manager on the deal.

The pricing is tighter than the guidance of plus-125bp area, plus-155bp area and plus-215bp area respectively. Qatar began marketing the 144A/Reg S deal earlier this week at plus-140bp area, plus-170bp area and plus-230bp area respectively.

The deal was expected to be priced late on 25 May. The UK’s HSBC, the US’ JPMorgan, Japan’s Mitsubishi UFJ Financial Group, and the local QNB Capital, a subsidiary of Qatar National Bank (QNB) are the global coordinators on the transaction. They are joined as lead managers by the local Al-Khaliji, the UK’s Barclays, the US’ Bank of America Merrill Lynch, Germany’s Deutsche Bank, Japan’s Mizuho Securities and SMBC Nikko, which is a subsidiary of Sumitomo Mitsui Banking Corporation (SMBC), also of Japan.

Qatar, which is rated Aa2/AA/AA, last tapped the debt market in December, when it raised $5.5bn through a five-year syndicated loan. Bank of Tokyo-Mitsubishi UFJ, Mizuho, SMBC, Deutsche Bank, Barclays and QNB helped the gas-rich state raise funds.

Gulf states, which rely heavily on the sale of hydrocarbons for revenues, are increasingly looking to tap the global debt markets to bridge the budgetary gaps they are facing on the back of lower oil prices. In April, Riyadh agreed terms with a group of international lenders for a $10bn loan, its first sovereign debt in at least 15 years.

Abu Dhabi, the biggest emirate in the UAE, launched a two-part $5bn bond at the tight end of price guidance. The emirate sold a $2.5bn five-year bond at 85bps over US treasuries, at the lower end of guided rate of 85-90bps, and a $2.5bn 10-year at 125bps over treasuries, compared to guidance of 125-130bps. Bank of America Merrill Lynch, the US’ Citigroup and JPMorgan were the lead managers on the deal.

Oman has plans to borrow $5bn-$10bn this year, and it is considering a eurobond in the first half of this year. Kuwait is another Gulf country that has indicated interest in tapping capital markets to raise funds.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.