Qatar raised $10 billion from a Eurobond that attracted around $45 billion of orders, as developing nations start to issue again following last month’s turmoil in global markets.
The Gulf monarchy, the world’s biggest exporter of liquefied natural gas and rated AA- by S&P Global Ratings, on Tuesday issued $2 billion of five-year bonds, $3 billion of 10-year notes and $5 billion of 30-year debt. The shorter tranches were priced with respective spreads of 300 and 305 basis points over similar U.S. Treasuries, equating to yields of 3.47% and 3.77%. The longer bond has a 4.4% yield, down from initial price talk of 4.75%.
Qatar offered a premium over its existing bonds, which helped attract demand from investors globally, according to a person familiar with the matter. Its $6 billion of notes maturing in 2049 traded at 4.03% on Monday, though the yield has since climbed to 4.17%. Israel, rated the same as Qatar by S&P, issued $5 billion last week that included a 30-year portion paying 3.875%.
“Qatar is double-A rated and now offers yield which we could only dream of a couple months back,” said Carl Wong, head of fixed income at Avenue Asset Management Ltd. in Hong Kong.
Sovereign sales are resuming after the spread of the coronavirus and the plunge in oil prices all but closed developing bond markets for most of March. As well as Israel’s deal, Panama issued $2.5 billion and Indonesia raised $4.3 billion on Monday in its biggest-ever offering in dollars.
“Qatar has offered juicy spreads on all three tranches,” said Chirag Doshi, chief investment officer at Qatar Insurance Company in Doha, before the final terms were announced. “The issue is expected to generate favorable demand and will open the door for more regional bond sales.”
Virus-related lockdowns are hammering most Gulf economies. Gas prices are closely tied to oil prices, which have halved this year after a deal between major producers to curb supply fell apart.
Qatar may have decided yields in the bond market were low enough to make it a better option for bolstering its capital than drawing down reserves or selling assets, according to Abdul Kadir Hussain, the head of fixed-income asset management at Arqaam Capital in Dubai.
“They continue to be a strong credit with low leverage,” he said. “Clearly, they believe that deficits will remain and hence they are not expecting a huge turnaround in gas prices. This is one of the tools for funding those deficits and in their view the right one to use for now.”
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