Qatari Diar bond sale heavily oversubscribed

Dubai/London: Qatari Diar's dual tranche $3.5 billion (Dh12.85 billion) bond sale attracted combined orders of over $23 billion according to a lead manager, as investors scrambled to get their hands on state-backed paper from the Gulf Arab state.

Foreign investors are keen to buy into debt issues from Qatar, the Gulf country rich in natural gas reserves and whose economy is expected to show double digit growth rates this year and in the next three to five years.

The $1 billion five-year tranche sale from the property arm of Qatar's sovereign wealth fund attracted an order book of over $11 billion. The bond yielded 3.5 per cent.

Diar's $2.5 billion 10-year tranche received more than $12 billion in orders, one of the lead arrangers on the deal said. The 10-year tranche carries a 5 per cent coupon.

"Qatar has got a pretty spectacular credit story to tell — growth rates are strong. They are seen as a very sensible and smart issuer, and they've demonstrated that again here," said Spencer MacLean, a banker with Standard Chartered bank in London.

Joint lead managers on the sale were Barclays, HSBC, Qatar National Bank, RBS and Standard Chartered.

Asian investors bought 10 per cent of the five-year tranche and 12 per cent of the ten-year tranche from the issuer showing increased demand for Qatar issues from Asia.

"If you rewind the clock to last November, the Asian orders for the five-year were 5 per cent, and 3 per cent for the 10-year. So demand has doubled for the five-year and quadrupled for the 10-year," Spencer said.

In November, Qatar sold $7 billion in bonds in three tranches which attracted a heavily oversubscribed order book. Following the issue, the regional bond market remained shut for months.

Diar has been an active investor in real estate projects in the Gulf and abroad. Qatar, the world's largest exporter of liquefied natural gas, is ensuring its key property firms weather the global crisis by pushing through defensive mergers, using Diar to invest in them.