Qatar’s unprecedented $9bn Eurobond sale has pressed the re-set button for the Gulf region’s debt market.
The country sold $9bn of bonds in three maturities on Wednesday, almost double the amount expected by analysts. The issue helped push 2016 offerings from the Middle East and North Africa, which includes Saudi Arabia and the UAE, to $29.3bn, already a record for the first half of a year, according to data compiled by Bloomberg.
“Nine billion is a lot of bonds to put into the market and to some extent it is going to reprice the region,” said Abdul K Hussain, who helps oversee $1.5bn as the chief executive officer of Mashreq Capital DIFC Ltd in Dubai.
“For countries like Saudi and Kuwait, and everybody else who has announced potential deals, it definitely means it’s very doubtful they would do anything for at least the next three or four months.”
Energy-exporting nations are increasingly turning to international capital markets following a halving of oil prices since 2014, which has forced some governments to raid their foreign cash reserves. Qatar is also in the second year of a $200bn infrastructure upgrade ahead of hosting the 2022 soccer World Cup.
The Qatar Interbank Offered Rate, which is used to price local-currency debt, rose to the highest level since January 2011 this week.
The average yield on Middle East bonds dropped 25 basis points this year to 4.8% on Wednesday, according to JPMorgan Chase & Co indexes. The yield on the Abu Dhabi government’s 10- year bond sold last month was little changed at 3.38pm local time yesterday.
Qatar’s bonds comprised $3.5bn in five-year notes priced to yield 120 basis points more than US Treasuries, the same amount in 10-year bonds at 150 basis points over Treasuries and $2bn of 30-year paper at a 210 basis-point spread.
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