DUBAI - Qatar on Tuesday started marketing U.S. dollar-denominated bonds in tranches of 5, 10, and 30 years, sources familiar with the matter said, seeking to raise cash amid low oil prices and market uncertainty caused by the coronavirus outbreak.
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 (bps) 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 paper.
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 75-80 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.
A government spokesman did not immediately respond to a request for comment.
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.
(Reporting by Davide Barbuscia, additional reporting by Saeed Azhar; Editing by Tom Hogue and Himani Sarkar) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))
