Qatar issues bonds to rescue faltering economy

Sara Wahid

The Qatari economy is suffering as a result of Doha’s support to terrorist organizations around the world.

The Covid-19 virus is also having a heavy toll on the economy of the tiny Gulf state.

The economic devastation Qatar suffers in this regard is behind its latest decision to issue bonds. The issuance of the bonds comes within efforts by Qatar to rescue its economy.

Untold losses

On April 2, Bloomberg said Qatar hired banks to raise more than $5 billion in bonds to shore up its finances against the global coronavirus pandemic and oil-price war.

It said Qatar is planning the bond to support its finances as low oil prices and the impact of the coronavirus pandemic weighs on it.

Gas prices are closely tied to the cost of oil, which has dropped more than 50% over the past month, Bloomberg said.

Qatar, a country of about 2.8 million, has unveiled stimulus packages worth 75 billion riyals ($20.3 billion) for the private sector to help mitigate the economic impact of the coronavirus outbreak and allocated 3 billion riyals to local banks as guarantees to back the finance and economic sectors, Bloomberg said.

Not the first time

This is not the first time Qatar issues bonds to rescue its economy.

In March 2019, Qatar raised $12-billion by selling bonds in the international market.

The debt sale was split into tranches of five, 10 and 30 years, Reuters said.

It added that the $2 billion five-year notes offer 90 basis points over US Treasuries, while the $4 billion 10-year and the $6 billion 30-year debt offer 135 bps and 175 bps respectively over the same benchmark, a document issued by one of the banks leading the deal showed. Earlier price indications were 20 bps higher for the five-year tranche and 25 bps higher for the longer tranches, Reuters said.

It noted that the initial guidance looked “attractive,” said Sergey Dergachev, senior portfolio manager at Germany-based Union Investment, offering some 30 basis points of new-issue premium – the price an issuer is ready to pay over its existing bonds to attract demand for the new issuance.