Qatar’s bonds rose after the largest-ever sale of debt by an emerging-market government received $28 billion of orders, four times the amount issued.
Qatar’s $3.5 billion of five-year bonds, half the total $7 billion sale, advanced to 100.1 cents on the dollar from an issue price of 99.87 cents, according to ING Bank NV data on Bloomberg at 5:59 p.m. in Doha. The emirate’s $1 billion of 30- year bonds rose 3 percent to 102.8 cents, according to prices provided by DZ Bank AG.
“This is the largest debt deal from an emerging-market sovereign to date,” said Fabianna Del Canto, syndicate manager at Barclays Capital, a lead arranger for the sale, in London. “Qatar has firmly established itself as the premier borrower in the region.”
Qatar, the world’s biggest exporter of liquefied natural gas, will use the bond proceeds to provide “contingency funding” for state-owned companies, pay for infrastructure projects, and invest in the international oil and gas industry, according to the bond sale prospectus obtained by Bloomberg News. The Persian Gulf emirate is spending billions of dollars diversifying its economy with acquisitions of stakes in London- based lender Barclays Plc and German carmaker Volkswagen AG.
‘Strong Appetite’
Middle East borrowers will sell as much as $18 billion of international bonds in 2010, Luis Costa, an emerging markets debt strategist at Commerzbank AG in London wrote on Nov. 11. Commercial Bank of Qatar, the country’s second-biggest bank by assets, sold $1.6 billion of bonds on Nov. 10. Dubai last month raised $1.93 billion through the biggest Islamic bond sale from the Gulf region this year, while Tourism Development & Investment Co., a state-owned developer of hotels in Abu Dhabi, raised $1 billion from a five-year Islamic bond issue.
“There remains very strong appetite for the region,” said Neil Slee, director of debt syndicate for Eastern Europe, Middle East and Africa at Credit Suisse Group AG, which was one of the lead arrangers for the deal. “It’s a reflection of market confidence in the Qatari credit story” that it was able to close the largest-ever transaction from an emerging market issuer, he said.
April Sale
The emirate was able to sell the bond at a lower cost than its last sale in April, with the five-year bond being priced to yield 1.85 percentage points above U.S. Treasuries yesterday. That compares with a spread of 3.4 percentage points it offered in April for a bond with similar maturity. A five-year bond issued by the Dubai government maturing in 2013 was yielding 5.8 percent today.
Dubai, which suffered the worst in the Middle East from the global financial crisis, is struggling to refinance its debt after its government related companies earlier borrowed more than $80 billion to transform its economy into a tourist and financial services hub. Qatar is rated Aa2 by Moody’s Investors Service and AA- by Standard & Poor’s. Dubai is not rated.
In addition to the five-year and 30-year bonds, Qatar issued $2.5 billion of 10-year bonds to yield 1.95 percentage points more than Treasuries. Qatar’s sale topped the $5 billion that Venezuela issued in October, according to ING Groep NV.
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