The issue was lead managed for the Finance Ministry by HSBC and Qatar International Islamic Bank. Coming on board at the co-managing level were Abu Dhabi Islamic Bank, Malaysia's CIMB, Gulf International Bank, the Islamic Development Bank, Kuwait Finance House and Qatar Islamic Bank. The roadshow went to Saudi Arabia, the UAE, Bahrain, Kuwait and Kuala Lumpur, and the bulk of demand was from Middle East investors. Subscription was split almost equally between Islamic and conventional investors, with demand coming from central banks, investment funds and individuals.

The money raised by the government will be partly used to finance the construction of the Hamad Medical City. The $450 million complex will initially be used as the athletes village for the 2006 Asian Games, after which it will be retrofitted (MEED 3:1:03).

The instrument is designed to create a benchmark for Islamic investors. 'With major gas-based projects on the horizon, the Finance Ministry wants to ensure that the widest possible range of funding streams are available for future corporate borrowing - project finance, export credits, conventional bonds and now Islamic paper,' says an HSBC official. Qatar issued sovereign bonds in 1999 and 2002 worth $1,000 million and $1,400 million respectively.

Doha is the second regional government to issue a sukuk. Manama has issued $730 million worth of the Islamic leasing instruments and plans another $250 million offering in October (MEED 26:9:03). The previous largest sovereign sukuk - a $600 million issue in 2002 by the Malaysian government - listed on the Bahrain Stock Exchange in late September.