19 May 2011 12:05 PM
Doha - Qatar Islamic Bank’s planned sale of Islamic bonds may benefit from the government’s backing of local banks ahead of the World Cup in 2022, helping keep yields near the sovereign benchmark rate.
QIB, the country’s largest Shariah-compliant bank, will sell sukuk maturing in more than five years to repay debt, acting chief executive officer Ahmad Meshari said on May 12. The yield on the bank’s 3.856% bond due October 2015 dropped 26 basis points this month to 3.1% yesterday and reached a record low 3.06% May 11, prices compiled by Bloomberg show. The government’s 4% non-Islamic dollar bond due in January 2015 yields 2.47%, the lowest on record.
“Qatar Islamic ticks all the boxes,” said Rami Sidani, the Dubai-based head of Middle East and North Africa investment at Schroder Investment Management Ltd, which oversees about $230bn of investments worldwide. “It’s investment grade and it’s a bank in Qatar, which means that it enjoys government support. I don’t expect too much premium on the pricing, I expect it to be close to the sovereign pricing.”
The Qatar Investment Authority, the nation’s sovereign wealth fund, invested 5.5bn riyals ($1.5bn) to raise its stake in local banks to 20%, Minister of Economy and Finance HE Yousef Hussein Kamal was cited as saying by the Qatar News Agency in January. The lowest yields on sukuk from the Gulf Co-operation Council region in six years prompted lenders from Sharjah Islamic Bank to the Islamic Development Bank to announce sales after offerings in the region slumped 58% to $964mn.
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