Qatar's $12 Billion Bond Tops Saudi Debt Sale to Lead EM

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(Bloomberg) -- Qatar raised $12 billion in its first dollar bond sale in two years, surpassing its estranged neighbor Saudi Arabia to issue the biggest dollar bond from an emerging-market nation this year.

The world’s biggest liquefied natural gas exporter sold $3 billion of five-year notes, priced to yield 135 basis over similar-maturity U.S. Treasuries, according to two people familiar with the matter, declining to be identified because the information is private. It also placed $3 billion of 10-year bonds at a spread of 170 basis points and $6 billion of 30-year securities at 205 basis points, the people said.

The sale, which eclipsed Saudi Arabia’s $11 billion bond issued earlier this week, received more than $53 billion in bids, including interest from joint lead managers. It was the country’s first public international bond sale since the start of a regional spat in June.

Read more: Qatar Sells First Foreign Sovereigns in Taiwan After New Rules

The 2023 and the 2028 maturing bonds will be listed on the Luxembourg Stock Exchange while the 2048 bond will be listed on the Luxembourg exchange and the Taipei Exchange.

"The size of both the issue and demand will have surprised many, but the combination of Taiwanese demand, the “geo-political” spread over similar-rated investment grade sovereigns and the economy’s robustness to shocks all helped," said Simon Quijano-Evans, an emerging-market strategist at Legal & General Investment Management in London.

Bridging Deficit

The Qatar bond sale comes after the Middle East’s security risk eased as U.S. President Donald Trump hinted military action in Syria may not be imminent and Russia toned down its rhetoric. A strike against Syria seemed imminent on Wednesday and hurt investor sentiment.

The gas-rich Gulf country, in the midst of a diplomatic and trade standoff with a group of Arab nations led by Saudi Arabia, plans to bridge its budget deficit of $7.6 billion with debt offerings. Initial price indications on the bonds were about 50 to 70 basis points wider than where the country’s existing bonds traded, according to data compiled by Bloomberg.

Qatar is the world’s richest country per capita on a purchasing power parity basis, and the country is rated three notches higher than Saudi Arabia by S&P Global Ratings. The direct economic and financial impact of the diplomatic rift is now fading, the International Monetary Fund said last month.

The nation’s economic growth is expected to accelerate to 2.8 percent this year, almost double the pace forecast for Saudi Arabia, the world’s biggest oil exporter, according to estimates compiled by Bloomberg. Saudi Arabia’s economy shrank in 2017 after the government scaled back spending. Still, Qatar’s gross domestic product is about a quarter of the size of it neighbor’s.

The state has a $1 billion bond maturing in 2019, according to data compiled by Bloomberg. Al Khaliji, Barclays Plc, Credit Agricole CIB, Credit Suisse Group AG, QNB Capital, Deutsche Bank AG and Standard Chartered Plc helped arrange the sale for Qatar.

©2018 Bloomberg L.P.

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