By Abhinav Ramnarayan, IFR
Qatar Islamic Bank is set to raise US$1.5bn in a sukuk
issue, and could be the first of many financial
institutions to tap this capital market this year. The
move follows a jumbo Islamic offering from Qatar last
month to raise US$4bn – the biggest ever international
sukuk transaction.
“I am not surprised at QIB,” said one origination banker
operating in the region. “We will probably see a few more
banks in the next couple of weeks announce some plans or
the other.”
Companies, especially financial institutions, are queueing
up to get both sukuk and conventional paper out there
because of excellent issuance conditions.
“This is a fantastic time – rates are low and benchmark
rates are low,” he said. He quoted the example of the
recent issuance by National Bank of Abu Dhabi earlier this
month.
“A seven-year deal was priced at MS plus 180bp, just five
months after they priced a five-year at MS plus 190bp,” he
said. “Credit spreads have come in a lot.”
The five-year is now trading at MS plus166bp, he added.
QIB was last in the market in 2010, when it priced a
US$750m 3.856% five-year sukuk at par, or 237.5bp over
mid-swaps, via Credit Suisse, HSBC and QInvest. At the
time, this was the tightest yield and first sub-4% coupon
from a Persian Gulf financial institution in two years.
It could well beat that record now, a banker said.
“There is a fair amount of liquidity in the market in this
region for Islamic paper,” said Shahzad Shahbaz, chief
executive of QInvest, QIB’s investment banking arm.
“The State of Qatar’s deal is a very good example that a
large amount of capital can be issued,” he said. QInvest
was one of the bookrunners on that deal. For the right
kind of issuer, the market is there right now for
issuance, he added.
The planned partnership between Qatar’s QInvest and
Egyptian investment bank EFG Hermes is expected to be
signed off in late October or early November, Shahbaz told
IFR.
The deal, which will see the two banks set up a joint
investment bank, was supposed to be completed before
September but will now be delayed by four to six weeks
because of regulatory issues, he said.
“The Egyptian FSA has raised some questions on the extent
of disclosure that EFG had made in the EGM where
shareholders voted on the deal,” Shahbaz explained. “They
have asked for some additional clarifications to be made
to the shareholders.”
In the next few weeks, EFG will hold another EGM to
provide more information, he added. Assuming it is passed
and the regulator is happy, the deal should be completed
by November, he said.
The partnership will give QInvest expanded reach in the
Gulf region and will also give it access to a brokerage
business, which is very had to establish organically, he
said.
“EFG has a strong market position, especially in the
brokerage business, where it is the top bank in the
region,” Shahbaz said.
State-owned Qatar Telecom today repaid a US$3bn loan
facility using existing funds, as it continues to work on
a full takeover of its Kuwaiti unit Wataniya.
The five-year syndicated term loan was signed in August
2007 through bookrunners Barclays, BNP Paribas, DBS and
RBS, and was priced at 65bp over Libor, according to
Thomson Reuters data.
Qtel said in April that it would use its own cash to repay
any obligations maturing in 2012 and that it was not
undertaking any refinancing options.
The announcement followed a Reuters LPC report earlier in
April which said Qtel had submitted requests for proposals
to international lenders to refinance up to US$2bn in
syndicated loans.
Two bankers told Reuters LPC that the company was looking
to split the US$2bn financing between a US$1bn standby
commercial paper and a US$1bn revolving credit facility,
to be used for the refinancing of a US$3bn five-year loan
signed in 2007 that matures in October.
Elsewhere, Fitch Ratings has affirmed Abu Dhabi’s
International Petroleum Investment Company at AA, with a
stable outlook, in line with Abu Dhabi’s current sovereign
ratings.
IPIC’s standalone credit profile is in the BB category,
the ratings agency said, noting the company’s relatively
weak credit ratios compared with other investment holding
entities.
Fitch also noted that IPIC’s liquidity is “presently
limited”, estimating that the parent company holds around
US$1.3bn of available cash compared to US$1.5 in 2012 debt
maturities.