Doha plans a rare bond issuance to open markets

The Qatari government's latest efforts to tap credit markets could lead to a surge in new bond offerings, as the country ramps up its infrastructure spending ahead of the 2022 FIFA World Cup.

Qatar is hoping to cash in on demand for high-quality credit following a slow year for bond sales.

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Qatar's government has picked six banks for a sovereign bond issuance, as it increases investment in infrastructure projects and construction works to prepare the country for hosting the 2022 FIFA World Cup.

Selected for the bond sale were Citi, JPMorgan, HSBC, Mitsubishi UFJ Financial Group, Qatar National Bank and Standard Chartered, Reuters reported.

Qatar is planning to spend US$150 billion (Dh551.01bn) on infrastructure during the next five years, said the country's ministry of economy and finance. The sovereign issuance would be Qatar's first since 2009.

The Gulf state, where the IMF estimates GDP will grow at 18.7 per cent this year, has the strongest credit rating in the Gulf alongside Abu Dhabi. Standard & Poor's rates the country "AA", while Moody's Investors Service rates Qatar's government "Aa2".

Issuances by Qatari companies have been "few and far between" this year, said Mark Watts, the head of fixed income at the National Bank of Abu Dhabi.

But a successful issuance by the Qatari government may reopen credit markets, he added.

"We've been hearing that a number of Qatari banks want to come to market, and you'd expect issuances from most of the big players," he said.

A January sale of bonds worth 50bn Qatari rials (Dh50.46bn) by the Qatar Central Bank to local lenders, intended to mop up excess liquidity in the banking system, was the last major issuance.

But a number of banks have laid the groundwork for new debt sales. Doha Bank is holding investor meetings next month for a benchmark bond offering in the first quarter of next year, said Sanjay Jain, the bank's deputy chief financial officer. Benchmark bonds are typically about $500m in size.

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