Doha Bank may delay bond sale to next year

'Customer deposits are cheap. Borrowing at a higher rate doesn’t make sense for the institution,' says Raghavan Seetharaman
Doha Bank may delay bond sale to next year
Doha Bank CEO Raghavan Seetharaman.
By Bloomberg
Tue 26 Apr 2011 05:50 PM

Doha Bank may delay a planned bond sale until next year because of costs, the chief executive officer of Qatar’s fourth-biggest lender by assets said.

“It has to be cost effective before we get on with it,” Raghavan Seetharaman said in a telephone interview on Tuesday. “Customer deposits are cheap. Borrowing at a higher rate doesn’t make sense for the institution,” Seetharaman said.

Qatar’s central bank cut interest rates earlier this 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 5 percent and the deposit rate by the same amount to 1 percent. Doha Bank said in December it planned to sell $500m of senior-debt bonds in the first quarter of 2011.

The yield on Qatar’s 10-year dollar bond maturing in 2020 has gained 6 basis points, or 0.06 percentage point, this year to 4.58 percent at 2:30 p.m. in Doha, according to prices on Bloomberg.

Doha Bank, which reported a 15 percent increase in first- quarter profit as revenue from lending rose, fell 0.6 percent to SR50.6 at the 1:10 p.m. close in Doha. The shares have dropped 22 percent this year.

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