Dubai: Qatar’s sovereign fund is borrowing around 7 billion euros ($7.6 billion) against its stock holdings, as the top liquefied natural gas exporter seeks to bolster its cash reserves at a time of plunging energy prices, people with knowledge of the matter said.
The Qatar Investment Authority is in discussions with banks including JPMorgan Chase & Co. and UBS Group AG for a margin loan backed by some of its European equity investments, according to the people, who asked not to be identified because the information is private. The deal could rank as one of the biggest-ever margin loans in the region.
The fund manages about $295 billion of assets and ranks as the eleventh largest globally, according to the Sovereign Wealth Fund Institute. It has holdings in some of Europe’s biggest companies including London Stock Exchange Group Plc, Volkswagen AG and Glencore Plc, data compiled by Bloomberg show.
Qatar, one of the world’s richest nations per-capita income, raised $10 billion in an April bond sale that attracted around $45 billion of orders. The Gulf country has been impacted by plunging oil prices because most gas prices are closely tied to the cost of crude, which dropped more than 50% in March.
The country is also heading into its fourth year of a Saudi Arabian-led standoff that has weighed on its finances and saw the QIA inject billions of dollars into local banks shortly after it started.
Terms of loan
Terms of the loan are still being finalized, and details such as the size could still change, the people said. Representatives for the QIA, JPMorgan and UBS declined to comment.
The nation has unveiled stimulus packages worth 75 billion riyals ($20.5 billion) - more than 10% of gross domestic product - to help the private sector mitigate the impact of the coronavirus outbreak. It has also allocated 3 billion riyals to local banks as guarantees to back the finance and economic sectors.
The QIA is among Gulf wealth funds that have built up assets of more than $2 trillion as a cushion for when oil runs out or revenues drop. These funds could see a decline of more than $300 billion this year because of the market turmoil, according to the Institute of International Finance, the industry’s global association.