Commercial Bank of Qatar (CBQ) is in talks with banks about a potential international bond issue that will most likely be denominated in US dollars, sources familiar with the matter said on Sunday.
If the deal goes ahead, CBQ would join a growing number of banks from the region tapping the international debt markets this year with the aim of improving capital reserves and boosting capital ratios to counter the impact of lower international oil prices.
CBQ, the Gulf Arab state's third-largest bank by assets, is looking at a benchmark-sized transaction, which conventionally means upwards of $500 million, the sources said.
CBQ declined to comment.
A US dollar-denominated bond issue is considered the most likely option, but the bank is also looking at issuing in Chinese renminbi, one of the sources said.
In March last year, CBQ received shareholder approval to issue bonds up to $1.5 billion under a euro medium-term note programme. This envisaged the possibility of issuing bonds denominated in a number of currencies including dollars, yen and Swiss francs.
CBQ issued in June last year a $750 million five-year bond through its subsidiary CBQ Finance, a special purpose vehicle incorporated in Bermuda and established to raise capital for the Qatari bank through bond sales.
That bond, arranged by Citi, HSBC, Morgan Stanley and National Bank of Abu Dhabi, has a 3.25 percent coupon and was yielding 3.32 percent on Sunday, Thomson Reuters data showed. The debt was issued under an existing $5 billion euro medium-term note programme.
CBQ launched a five-year turnaround plan last November following five consecutive quarters of falling profits.
By applying tighter underwriting standards and higher diversification across sectors and countries, the bank’s plan was aimed at reducing its ratio of non-performing loans, and also at boosting earnings per share, return on equity, return on assets and Tier 1 capital.
CBQ is rated A2 by Moody’s and BBB+ by Standard & Poor’s.
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