Tuesday, Jul 10, 2012

--Aggregate firm orders for sukuk exceed $7.5 billion

--Indicated pricing attractive, fund manager says

(Recasts. Adds demand, fund manager's comments, background throughout.)

By Nikhil Lohade

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Qatar has received strong investor demand for its planned dual-tranche Islamic bond, or sukuk, fueled by the gas-rich Gulf Arab state's initial price guidance, bankers say.

Aggregate firm orders have topped $7.5 billion, split roughly equally between the two tranches, one banker, who declined to be identified, told Zawya Dow Jones.

Qatar earlier Tuesday said initial profit guidance for the five-year tranche was around 135 basis points over midswaps, while for the 10-year tranche it was in the area of 175 basis points over midswaps.

"The indicated pricing is attractive compared with its existing conventional yield curve, but that was expected," said one fund manager at a regional bank.

Qatar has been among the world's fastest-growing economies in recent years, driven by the development of the country's hydrocarbon resources, in particular its natural-gas reserves, which are the world's third-largest after Russia and Iran.

The Gulf Arab state last tapped the debt market late last year with a $5 billion three-tranche bond issue, pricing its 5-year tranche to yield 3.184% at the time and the 10-year tranche to yield 4.630%.

Demand for its debt was substantial even then, helping the world's largest exporter of liquefied natural gas, which racked up growth of nearly 20% in 2011, to create a competitive yield curve by deepening its capital markets.

Qatar's planned issue comes at a time when several Gulf entities are looking to tap the debt market as global risk sentiment improves. Bahrain issued a $1.5 billion bond late last month.

Barwa Bank, Deutsche Bank, HSBC, QInvest and Standard Chartered Bank are book runners for Qatar's planned sukuk, which is expected to be issued this week.

-By Nikhil Lohade, Dow Jones Newswires; +9714 446-1694; nikhil.lohade@dowjones.com; Twitter: @ZDJnews

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

10-07-12 1051GMT