Qatar stuns ME debt market with record $9 billion bond

Bloomberg

Borrowers and investors across the Middle East are adjusting to a new landscape following the region’s biggest-ever bond sale.
Qatar sold $9 billion of Eurobonds in three maturities on Wednesday, almost double the amount expected by analysts. The issue helped push 2016 bond sales from the Middle East and North Africa, which includes Saudi Arabia and the United Arab Emirates, to $29.3 billion, already a record for the first half of a year, according to data compiled by Bloomberg.
“Nine billion is a helluva lot of bonds to put into the market and to some extent it is going to reprice the region,” said Abdul K Hussain, who helps oversee $1.5 billion as the chief executive officer of Mashreq Capital DIFC Ltd. in Dubai. “For guys like Saudi and Kuwait, and everybody else who has announced potential deals, it definitely means it’s very doubtful they would do anything for at least the next three or four months.”
Energy-exporting nations are increasingly turning to international capital markets following a halving of oil prices since 2014, which has forced some governments to raid their foreign cash reserves. Qatar is also in the second year of a $200 billion infrastructure upgrade ahead of hosting the 2022 soccer World Cup.

SAUDI SALE
Qatar’s bonds comprised $3.5 billion in five-year notes priced to yield 120 basis points more than U.S. Treasuries, the same amount in 10-year bonds at 150 basis points over Treasuries and $2 billion of 30-year paper at a 210 basis-point spread.
This is the first sale in four years from Qatar, the world’s largest exporter of liquefied natural gas. The nation’s budget deficit will widen to 5.2 percent of national output this year, according to the median forecast of eight analysts surveyed by Bloomberg. Moody’s Investors Service rates the country Aa2, the third-highest investment grade.
The Qatari sale is the latest in a flurry of offerings from the six-nation Gulf Cooperation Council region. Already this week, Noor Bank, DP World Ltd., Emirates Islamic Bank PJSC and Etihad Airways and its partners have tapped the market for a total of almost $3 billion. Saudi Arabia last week invited banks to pitch to underwrite a debut international bond issue.
“Raising $9 billion in difficult macro conditions raises the confidence and morale of other sovereign issuers in the region who are in the pipeline, especially Oman and Saudi Arabia,” said Chirag Doshi, Doha-based senior vice president of investments at Qatar Insurance Co., which put in a bid to buy Qatar’s bond.