Qatari State-linked Firms Eye Bonds

Qatari state-related firms are expected to issue US$3 billion to US$4 billion in bonds in 2009 to refinance existing debt and fund new projects, after a government benchmark bond paved the way, a member of the State Finance Policy Committee said. State and corporate issuers in the energy-exporting Arab region have raised more than US$7 billion by issuing bonds over the last three months in a new trend as spreads have narrowed and demand has grown for high-grade emerging market bonds.

"We know some of these state-related entities plan to raise financing from the market," committee member Abdul-Rahman al-Shaibi commented. "This could be anywhere between US$3 and US$4 billion for state-related companies this year." State-controlled Qatar Telecommunications Co (Qtel) said last week it planned to issue up to US$5 billion in bonds partly to help refinance debts, without giving a time frame.

The Qtel bond sales come after Qatar, the world's biggest exporter of liquefied natural gas, and Abu Dhabi, the capital of the United Arab Emirates, each raised US$3 billion by issuing sovereign bonds in late March and early April. Qatar's benchmark bond included a US$2 billion 5-year note yielding 340 basis more than comparable U.S. treasuries and a US$1 billion 10-year note yielding 380 basis points more than comparable U.S. treasuries.

Shaibi did not rule out the possibility of issuing more sovereign bonds as part of a government strategy to secure good pricing for outstanding bonds and narrow spreads. - Guardian