Qtel eyes $1b commercial paper programme

Dubai  Qatar Telecom has asked banks for proposals about a $1 billion (Dh3.67 billion) commercial paper programme, three sources said Thursday, in what would be a rare example of a Middle Eastern entity using such an instrument.

Qtel issued the proposal last month to explore options concerning a possible programme, which would be used to assist short-term liquidity management.

Talks are still exploratory in nature, said two of the sources, who declined to be named because the information is not public, and it could be a number of months before Qtel issues commercial paper if it decides to go ahead.

A formal mandate appointing banks generally follows after proposal requests are sent out. Qtel was not available for comment.

"It would be breaking new ground for Middle Eastern corporates if they did," a source at one international bank said, adding that Mubadala, the Abu Dhabi state-owned investment fund, and a couple of regional banks were the only current issuers of commercial paper from the Gulf.

Commercial paper is a short-term unsecured debt instrument used to manage near-term obligations and to finance everyday expenses more easily.

Qtel's request for proposals asked banks to evaluate options for a standby loan facility to back up the commercial paper programme and stop damage to the company's rating from taking on short-term debt. The two bankers said no fixed amount for the facility was given in the invite.

No refinancing needs

Qtel said in April it had no refinancing needs and would pay back maturing debt using its own cash, following reports it was seeking a $2 billion loan to help refinance a $3 billion obligation due in October.