DUBAI- Qatar's Commercial Bank is planning to raise at least $1 billion through bond issues in the coming months, Chief Executive Joseph Abraham said, as the bank looks to take advantage of positive market conditions to boost its capital.
It plans to issue its debut international additional tier 1 bonds in the first quarter, aiming to raise between $500 million and $650 million, depending on market appetite.
On top of that, probably at the end of the quarter, it plans to issue senior bonds worth $500-$600 million, Abraham said.
"We’re seeing if we can diversify the investor base in our bonds, and also the tenor ... because I think this is a good time to look at maybe extending the tenor for some portions of the bonds," he said in an interview.
This week the bank reported a 35.6% annual drop in net profit for 2020 but expects business conditions to improve this year amid the vaccines roll out and a rebound in energy prices.
"Qatar’s budget was done at a level of $40 per barrel of oil and now we’re well above that, plus gas prices have also rebounded from their lows, so those are very positive because they give a bit of fiscal flexibility I think for the government," Abraham said.
Qatar, a wealthy Gulf state and a top exporter of liquefied natural gas, has based its 2021 budget on an average oil price of $40 per barrel, a conservative assumption which means revenues could be higher than forecast.
Meanwhile this month's easing of a three-year-old regional dispute with some of its Arab neighbours is expected to help economic sectors such as trade and tourism.
"Of course we have the removal of the embargo or blockade of Qatar which obviously is beneficial I would say primarily initially in terms of sentiment," Abraham said.
Based on expectations that Qatar's economy will grow by 2.8%-3%, loan growth is likely to be about 4%-6% this year, he said.
"I believe the outlook is positive. You won’t see a sudden uptick in business activity, I think this is a slow, steady uptick, and it's actually more skewed towards the second half of the year."
(Reporting by Davide Barbuscia. Editing by Jane Merriman) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: firstname.lastname@example.org))