Qatar's Doha Bank puts $1bn Islamic bond issue on hold

'Poor market conditions' blamed, first signs Islamic finance suffering from contagion.
Qatar's Doha Bank puts $1bn Islamic bond issue on hold
By Reuters
Sun 27 Jul 2008 01:38 AM

Qatar's Doha Bank has put on hold a plan to sell a $1 billion global Islamic bond to finance investments in renewable energy because of poor funding market conditions, its chief executive said on Saturday.

The fifth-largest bank in Qatar by market value had planned to sell the bond in September to fund projects such as setting up an exchange for trading greenhouse gas emissions permits. "We deferred it. It is not a time to venture for a bond," Doha Bank chief executive Raghavan Seetharaman said during a visit to the South Korean capital Seoul.

"At this point we put [it] on hold and wait for global funding markets to calm down." He added that the bank may look again at the issuance plan in the middle of next year.

The postponement may signal that the malaise infecting conventional markets may be spreading to the Islamic finance market, which until now has been relatively shielded from the effects of the slowing global economy and the US subprime crisis. Doha Bank, established in 1979, offers a full product range including Islamic banking and has $10 billion in assets and nearly 1,000 staff. Like its peers, it has seen rapid loan growth in recent years under buoyant economic conditions in Qatar.

Doha Bank is expanding internationally through establishing representative offices in Qatar's main trading markets. Those operations are focused primarily on trade-related business. Doha Bank is interested in buying shares in overseas banks and non-banking financial institutions, as well as opening an 50:50 asset management joint venture in South Korea, Seetharaman said.

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