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Tue 2 Jun 2009 08:14 PM

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Qtel bond issue oversubscribed - sources

UPDATE 1: Telco gets investors' thumbs up with significant demand reported from Europe.

Qatar Telecommunications Co's (Qtel) $1.5 billion debut bond sale has received more than $10 billion in bids, sources close to the sale said, as investor demand for high-rated emerging market debt rises.State-controlled Qtel, via its Qtel International Finance Ltd arm, is planning to sell $900 million in five-year notes at a yield spread of 415 basis points over comparable US Treasuries, said IFR, a Thomson Reuters service, and confirmed by the sources on Tuesday.

Qtel is planning to sell a second tranche of $600 million in 10-year notes at a yield spread of 435 basis points over Treasuries, according to IFR and also confirmed by the sources.

"There is significant amount of demand from Europe," one of the sources said.

Qtel declined to comment on the bond issue, launched on Tuesday. Barclays, BNP, Deutsche Bank, JPMorgan and RBS are lead managers on the deal.

The bond issue is part of Qtel's $5 billion general medium term note programme, which is partly to help the company refinance its debts.

Qatari state-affiliated firms are eyeing between $3 billion and $4 billion in bond sales this year to refinance debt and finance new projects as spreads narrow, Abdul-Rahman al-Shaibi, a member of Qatar's State Finance Policy Committee told Reuters on Sunday.

Qtel said last week that of two loan facilities totalling $5 billion, one would mature in the fourth quarter of 2009 and the other in the third quarter of 2012.

State and corporate issuers in the Gulf region have raised more than $7 billion by issuing bonds over the last three months and analysts expect bond sales to rise.

Qatar, the world's biggest exporter of liquefied natural gas, and Abu Dhabi, recently raised $3 billion each by issuing sovereign bonds. Qatar issued their bonds in early April and Abu Dhabi held their programme in late March. (Reuters)

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