Qatar Islamic Bank to sell sukuk this year, acting CEO says

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BOND SALE Qatar Islamic Bank plans to sell Islamic bonds this year to help reduce debt payments, its acting CEO said

BOND SALE Qatar Islamic Bank plans to sell Islamic bonds this year to help reduce debt payments, its acting CEO said

Qatar Islamic Bank, the Arabian Gulf country’s biggest Sharia-compliant lender, plans to sell Islamic bonds this year to help reduce debt payments, acting CEO Ahmad Meshari said.

The bonds, called sukuk, will have a maturity of more than five years. Details of the sale will be announced in the third quarter, Meshari said in a telephone interview from Doha on Thursday.

“A major issue is cost control of our funding,” Meshari said, without indicating how much the bank plans to raise from the sale or in what currency the sukuk will be denominated.

Islamic bond sales in the six-nation Gulf Cooperation Council, which includes Saudi Arabia and Qatar, fell 58 percent to $964m so far this year from the same period in 2010, according to Bloomberg data.

The average yield on sukuk by borrowers in the GCC declined 86 basis points, or 0.86 percentage point, this year to 4.64 percent on May 5, the lowest since September 2005, according to the HSBC/NASDAQ Dubai GCC US Dollar Sukuk Index. The rate has since increased less than 1 basis point, the data show.

Qatar Islamic raised $750m in September by selling five-year sukuk priced to yield 237.5 basis points above similar maturity bidswaps, according to the terms of the offer obtained by Bloomberg.

Qatar’s central bank cut interest rates last month for the first time in eight months after a slowdown in credit growth. The bank lowered the benchmark overnight lending rate by 50 basis points to five percent and the deposit rate by the same amount to one percent.

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