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Qatar takes conventional over sukuk route with $9 billion issuance

By
today 31 May 2016 GMT
Photo Credit: Juaned/CC/Flickr

Qatar and Abu Dhabi go conventional


Qatar has issued $9 billion worth of sovereign bonds across three maturities, selling $3.5 billion in five-year and 10-year issuances and a $2 billion 30-year issuance, according to a report by Bloomberg. The deal follows a $5 billion Eurobond from Abu Dhabi last month which attracted an order book of $17 billion, with considerable demand coming from outside the region.


Qatar previously issued sukuk in 2012 with a dual issuance totalling $4 billion for five and ten years respectively.



Saudi Arabia May Follow


Saudi Arabia, and Saudi Aramco are expected to enter the credit market shortly, possibly before Ramadan.


Saudi Aramco is likely to issue Riyal denominated sukuk and has appointed JPMorgan Chase & Co., HSBC Holdings Plc and Riyadh Bank to arrange the deal.


Saudi Aramco subsidiaries Saudi Aramco Total Refining & Petrochemical Co (Satorp) and Sadara Chemical Co have previously issued sukuk.


It is not known whether the Saudi sovereign issuance will be Sukuk or a Eurobond, though according to a report in Bloomberg, Saudi Arabia may “have to offer a very generous premium” to investors after Qatar has flooded the market.


Dubai Corporates Stick with Sukuk – Noor Bank Funding Jumps


RHB Global Sukuk Markets Research reported DP World Ltd (Baa3/NR/BB-), the Dubai-owned port company, issued a USD1.2bn 7y senior sukuk priced at 3.9% (MS+237.5bps) for general corporate purposes and to refinance its sukuk that is maturing in 2017. Emirates Islamic Bank (NR/NR/A+) sold USD750m 5y Sukuk al-Wakalah at a profit rate of 3.54% (MS+220bps) with a 2.95x BTC which attracted the investors from GCC, Asia and Europe; while Noor Bank (NR/NR/A-) priced USD500m AT1 Pc6/21 at 6.25%.


The Emirates Islamic sukuk was much tighter than its previous issuance, whilst Noor Bank has previously issued at a considerably lower profit rate of 2.788% though the previous issuance was not perpetual. RHB added “We find Noor Bank’s Pc6/21 issuance rather attractive given its competitive yield relative to other perps in the USD sukuk space”


USD Sukuk Issuance up to 27 May-2016. Source: Bloomberg, RHBFIC

USD Sukuk Issuance up to 27 May-2016. Source: Bloomberg, RHBFIC


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