Qatari Diar launches $ 3.5bn bond deal

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The size of the 10-year tranche is set at $ 2.5bn and is expected to yield 190 basis points over comparable US Treasurys. The $ 1bn, five-year tranche is set to yield 180 basis points over Treasurys. Both have launched below initial price guidance, affirmation that demand for the notes is so high that the issuer doesn’t have to pay as much to attract investors.

Order books have swelled to more than $ 20bn for the total deal, according to Andrew Brenner, head of emerging markets at Guggenheim Securities.
Investors said that demand is being helped by the government’s explicit full backing of the notes.

Qatar has an “extremely high-quality” credit rating, said Gorky Urquieta, head of emerging-market debt at ING Investment Management.

As a result, Moody’s Investors Service assigned the notes and issuer an Aa2 rating.

“QDF’s Aa2 ratings are in line with the sovereign rating of Qatar because the government, acting through the Ministry of Economy and Finance, will unconditionally and irrevocably guarantee the payments in respect of the bonds that QDF plans to issue,” said Martin Kohlhase, a Moody’s assistant vice president based in Dubai.

Credit rating agency Standard and Poor’s last Wednesday assigned an AA rating to the proposed bond issue.

It said most of the proceeds from the deal will finance the development of large-scale real-estate projects in Qatar.

The money will finance future capital expenditures and the repayment of certain debts incurred by Barwa, Qatar’s second-largest real-estate developer by market value, which is 45% owned by Qatari Diar, said S&P.

The bookrunners are Barclays, HSBC, QNB, Standard Chartered and Royal Bank of Scotland.

The deal comes on the heels of a global roadshow that began last week in London.

 

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