February 27, 2018 / 11:22 AM / 3 months ago

Qatari banks find investor appetite in niche markets

LONDON, Feb 27 (IFR) - Qatari banks are continuing to edge back into the capital markets, with both Qatar National Bank and Commercial Bank of Qatar raising fresh funds on Tuesday.

Banks from the country have tapped niche markets in recent months, refilling coffers in an effort to diversify funding sources amid the embargo imposed on Qatar by other Arab states.

QNB (Aa3/A/A+), the Gulf’s largest bank, has sold nearly US$2.4bn of bonds through private placements this year, and has also raised A$700m (US$563m) in a Kangaroo dual-tranche deal and US$720m through a 30-year note in Taiwan’s Formosa market.

Its latest offering is in the offshore renminbi or Dim Sum market, raising Rmb750m (US$118.9m) through a three-year note at a yield of 5.1%. The transaction was sole led by Standard Chartered.

Peer CBQ (A2/BBB+/A), which is the Gulf state’s third largest bank by assets, has sold a SFr335m (US$357.9m) three-year bond in the Swiss franc market via lead manager Credit Suisse. The three-year deal is bigger than the minimum SFr250m CBQ was initially seeking. The deal priced at a yield of 0.697%.

Saudi Arabia, the United Arab Emirates and Bahrain cut diplomatic ties with Qatar last year, and imposed an economic boycott, protesting against its relationship with Iran.

That sparked fears that Qatari banks might struggle for funding, but niche markets have offered a way for issuers to bridge any gaps, with investors receptive to new deals.

“Not many people are worried about Qatar,” said one banker not involved in either deal. He downplayed the political significance of the trades.

The big test for Qatari issuers will come when one decides to test investor interest in more mainstream bond markets. No Qatari borrower has accessed the US dollar market since the spat with Doha’s Gulf neighbours erupted last June.

The Qatar sovereign is mulling a possible bond market return, according to sources, although no mandate has been announced yet. (Reporting by Robert Hogg; editing by Sudip Roy, Alice Gledhill)

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