Bonds and sukuks are among the “most attractive” ways of funding more than $45bn projects planned in Qatar this year and $140bn projects planned in the upcoming years, Doha Bank Group CEO Dr R Seetharaman has said.
Speaking at a Thomson Reuters conference here yesterday, he said in 2012 Qatar issued sukuk worth $4bn and earlier, in 2011, Qatar came out with QR50bn bonds for local banks.
“QNB recently came up with a $1bn bond issue for a tenure of seven years. In March 2013, Qatar’s Central Bank issued QR1bn of local currency sukuk and QR3bn of local currency conventional bonds.”
Qatar has started Treasury bill trading since 2011 end and is working towards trading of bonds on Qatar exchange. According to recent IMF forecast, Qatar’s Government debt as a percentage of GDP is expected to come down from 34.9% in 2013 to 26.2% in 2018.
This may be on account of improvement in economic growth from diversification and steady borrowing levels. Qatar’s debt as a percentage of GDP is within reasonable levels when compared to similar levels of advanced economies. Qatar can leverage on its fiscal strength for economic diversification.
Both Government and private players are expected to tap the bond market as they participate in Qatar’s economic diversification. Hence bonds are an important source of funding to support Qatar’s economic diversification.
On spending trends in Qatar, he said: “According to National Development Strategy during 2011-2016, total gross domestic investment is expected to be about QR820bn, out of which government investment will be to the tune of QR347bn. Investment of Qatari companies for next five years is QR 130bn. Non hydrocarbon investment is also driven by Qatar government companies. Qatar’s budget for 2013/14 has a spending of QR210.6bn up 18% on the previous fiscal. This budget had an increased allocation for infrastructure spending as Qatar sets out to diversify its economy.
On trends in the GCC bond market, Seetharaman said: “Bonds issued in GCC exceed $18bn so far in 2013. Out of global sukuk of $15bn in 2013, Islamic bonds close to $10bn pertain to GCC. Abu Dhabi, Dubai and Dubai Electricity and Water had issued conventional bonds in 2013. Saudi Sovereign and Investment Corporation of Dubai had issued sukuks in 2013. In recent years UAE banks such as Emirates NBD have tapped the Yuan bond market. National Bank of Abu Dhabi and Abu Dhabi Commercial Bank have tapped the ringgit bond market. Qatar petroleum tapped the yen bond market in 2012. The success of these bond issues indicate that Global investors have evidenced interested in GCC market.”