DUBAI - Qatar started marketing U.S. dollar-denominated bonds in tranches of 5, 10, and 30 years on Tuesday, a document showed, seeking to raise cash amid low oil prices and market uncertainty caused by the coronavirus pandemic.
Qatar is the first Gulf state to issue international securities since crude prices plunged early last month, pushing up borrowing costs for governments of the oil-producing region.
Qatar is offering an initial price guidance of around 335 basis points over U.S. Treasuries for the 5-year tranche, around 340 bps over the same benchmark for the 10-year tranche, and around 4.75% for the 30-year tranche, according to a document issued by one of the banks leading the deal and seen by Reuters.
The 30-year notes are Formosa bonds, or bonds sold in Taiwan by foreign borrowers and denominated in currencies other than the Taiwanese dollar.
"The bond sale's success will depend on the pricing, which will determine investor appetite for a deal. The Qatari leadership will want to steal ahead of its neighbours and demonstrate there is demand for the issue," Castlereagh Associates said in a note this week.
The initial price guidance puts the notes at a premium of around 75 to 80 basis points over Qatar's existing bonds due in 2024, 2029 and 2049, according to Refinitiv data.
Qatar has hired Barclays, Credit Agricole, Deutsche Bank, JPMorgan, QNB Capital, Standard Chartered, and UBS to arrange the debt sale, which should be completed later on Tuesday.
Qatar said in its bond prospectus, seen by Reuters, that the new coronavirus outbreak could continue to hurt its economy and financial markets, and could lead to a recession this year.
Qatar's ruler, Emir Sheikh Tamim bin Hamad al-Thani, has asked the government to postpone $8.2 billion worth of unawarded contracts on capital expenditure projects because of the coronavirus outbreak, according to the prospectus.
A government spokesman did not immediately respond to a request for comment.
Lower oil prices have "had a significant impact" on the state's revenues and its financial conditions, Qatar said, as the oil and gas sector contributed to 83.3% of its total revenues in 2018 and to 34% of its total nominal GDP last year.
Other governments in the region are exploring funding options, as they seek extra liquidity to deal with an economic slowdown caused by the virus outbreak and with the impact of lower oil prices on their revenues.
Abu Dhabi, Dubai, Saudi Arabia, Bahrain, and Oman have been in talks with banks over the past month or so, sources have said.
Qatar was in the global debt markets last year, raising $12 billion in March and drawing around $50 billion in demand for the transaction.
(Editing by Larry King) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: firstname.lastname@example.org))