'The deal flew very well at syndication,' says one of the lead arrangers. 'People liked the pricing and compared with the 2000 borrowing - which was a little strained - this was a very easy process.'

It is understood that commitments totalling about $600 million were received and the lead arrangers - Arab Banking Corporation, Gulf International Bankand Sumitomo Mitsui Banking Corporation - along with a handful of the major subscribers, had their final takes scaled back.

A total of 26 financial institutions - including the lead arrangers - participated in the transaction. 'There are perhaps a couple more regional banks, but there is clearly strong international support for the deal,' says a banker involved.

The package has tenor of five years, with a two-year grace period and an average life of three and a half years. It has a margin of 52.5 basis points (bp) over Libor (MEED 5:4:02).

Participants were offered three tranches: $35 million tickets with fees of 35 bp; $25 million tickets with 30-bp fees; and $15 million tickets offering 25 bp.

The facility is the first sovereign borrowing made by Qatar since a drawn-out $500 million, seven-year borrowing with a margin of 62.5 bp that finally closed in late 2000 (MEED 17:11:00).

'It's interesting to see where pricing has come from and gone to,' says a banker participating in the deal. 'In 1997, Qatar paid 32.5 bp for $300 million of five-year money. Doha's credit story is so much better now but they are paying more. Market sentiment is moving even faster than Qatar's economy.'

Other bankers have drawn attention to the sovereign borrowing now under way in Bahrain. Bahrain is taking a $600 million, 10-year loan from a six-bank club with a margin of 75 bp. However, the difference in the two countries' ratings suggests the spread should have been wider. US credit rating agency Moody's Investors Servicerates Bahrain at Ba1 and Qatar at Baa2.

'Either Bahrain was very thin or Qatar left a fair amount on the table,' says the second banker. 'Take your pick.'