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Wed 30 Jun 2010 04:25 PM

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Qatar issues $550m in 5-yr local bonds - source

The new issue, which will mature on June 30, 2015, is transferable outside of Qatar.

Qatar issues $550m in 5-yr local bonds - source
(Getty Images)

Qatar issued QR2bn ($549.7m) in domestic bonds with a 5 percent coupon on Wednesday as it rolled over a prior issue of the same amount, drawing hefty demand, a central bank source told Reuters.

The five-year paper follows a sale of QR10bn riyals in conventional and Islamic bonds to local banks earlier in June, which was the Gulf's first domestic sovereign offering in 2010.

"There was a lot of demand, around QR10bn," said the central bank source, who declined to be identified, adding it was unclear if the Gulf Arab state would issue more debt this year.

The new issue, which will mature on June 30, 2015, is transferable outside of Qatar unlike the previous offering, the source said, confirming previous comments to Reuters by a banking source.

The sources gave no indication of pricing of the bond.

The world's largest liquefied natural gas (LNG) exporter has embarked on issues of domestic debt, aiming to launch a local debt market, provide a new vehicle to pool excess liquidity in the banking sector and diversify its funding away from dollars. Previously, government debt issues have been predominantly U.S. dollar-denominated.

The eight-year, 6.5 percent bonds issued earlier this month were evenly split and allocated directly to nine local banks without any competitive bidding.

Cash-rich Qatar issued $7 billion in dollar-denominated bonds in November, marking the largest sovereign debt issuance in the Arab Gulf last year, which attracted a reported order book of over $30 billion.

The OPEC-member country, whose economy is expected to power ahead at a double-digit clip this year, is rated 'AA-' by Standard & Poor's and 'Aa2' by Moody's. (Reuters)

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