Zawya Dow Jones/Doha
Private sector demand for financing in Qatar is weak but will pick up as the government’s recently announced $100bn, 10-year infrastructure spending plan kicks in, the chief executive of private Qatari investment bank QInvest said yesterday. An interest rate cut by the Qatar central bank last week was aimed at stimulating private sector lending, Shahzad Shahbaz told Zawya Dow Jones in an interview yesterday. “The banks are willing to lend, I think it’s a question of the demand for financing,” he said. Last week, the central bank slashed one of its key interest rates for the second time in eight months in a bid to invigorate private sector credit growth. It cut its overnight deposit rate from 1.5% to 1% and also reduced its repurchase, or repo, rate by 55 basis points to 5%. Qatar, the world’s largest exporter of liquefied natural gas (LNG), expects its economy to grow 15.7% in 2011 as it gears up to spend $100bn on transport and infrastructure-related projects that it must complete if it’s able to stage the 2022 World Cup, which it won the hosting rights for in December. Asked whether there were many companies wanting to raise money Shahbaz said: “No, that’s one of the challenges. That’s why the government is pushing down rates to get the activity going.” Doha-based QInvest, which has paid up capital of $750mn, will focus on growing its core investing banking and investment management divisions in 2011 and also plans to open a new broking arm in “a few weeks” time, its CEO said. It hopes to open an office in Saudi Arabia in the third quarter of this year and is considering opening a branch in Abu Dhabi as well. The company’s plan for an initial public offering (IPO) in the first half of 2012 is dependant on “market conditions”, Shahbaz said. The investment banking outlook in Qatar, which has seen precious few IPOs over the last couple of years, “could always be better”, Shahbaz said, but added that he was still “reasonably optimistic”. “Our business is based on whether there is advisory going on, whether there are IPOs, sukuks and structured financing being done and we’ve got a reasonable amount of activity in that space taking place in Qatar and around the region so currently we are satisfied,” he said. Qatar’s debt markets, though, have been a hive activity compared with equity markets.A string of companies in the autumn last year, including the gas-rich state’s largest mobile operator Qatar Telecom and Qatar Islamic Bank, or QIB, launched bond and sukuk issues.The country’s second largest Islamic lender Masraf Al Rayan said late last month it plans to issue a $1bn sukuk at the end of the year, while two people familiar with the matter told Zawya Dow Jones in February that Qatar International Islamic Bank hopes to issue a $500mn sukuk by the middle of 2011.