Abu Dhabi, Qatar Turn to Private Markets to Raise Billions

f1)vy2t8wzh62wpnw{a1p[hj_media_dl_1.png Bloomberg League tables

Article content

(Bloomberg) — Abu Dhabi and Qatar have placed billions of dollars through private bond sales in recent weeks as the war in Iran stokes market volatility.

Article content

The United Arab Emirates’ capital on Thursday raised $500 million by reopening a 2034 bond, a day after tapping the same bond and a separate 2029 issue for $2 billion, according to data compiled by Bloomberg. The private deals were arranged by Standard Chartered Plc, according to people familiar with the matter.

Article content

Article content

Article content

The sales came days after Qatar’s Ministry of Finance issued $3 billion in a private placement arranged by JPMorgan Chase & Co., the data show. State-backed lender Qatar National Bank QSPC also sold a $1.75 billion bond in a private deal in March.

Article content

Article content

In total, Gulf issuers have raised about $7.76 billion in US dollar-denominated private placements since the conflict began on Feb. 28, including Emirati lenders such as First Abu Dhabi Bank PJSC and Mashreqbank PSC, the data show. Emirates NBD Bank PJSC placed a further $200 million on Friday, bringing its total since the war to $325 million.

Article content

Although the US and Iran are currently in a two-week ceasefire, energy markets have yet to return to normal. Abu Dhabi was forced to suspend operations at the UAE’s largest natural gas processing facility earlier this month. Meanwhile, Iranian strikes in March damaged infrastructure at Qatar’s liquefied natural gas export complex — the world’s largest — knocking out about 17% of the country’s annual export capacity for potentially up to five years.

Article content

Public bond markets in the Gulf — among the busiest globally in recent years — have effectively shut since the war began, and sentiment remains fragile despite the ceasefire. Issuers in the region sold $50 billion of debt on public markets before the start of the conflict.

Article content

Article content

The yield on Qatar bonds maturing in May 2034 is around 4.4%, slightly below the nine-month high reached in March. Abu Dhabi bonds of comparable maturities are trading at around 4.6%, having climbed to a near one-year high of 4.765% in March.

Article content

Still, credit markets have been resilient and there is appetite for debt from the region, said Zeina Rizk, co-head of fixed income at Amwal Capital Partners. 

Article content

“It’s unclear whether this is complacency or a view that the situation won’t last long,” Rizk said. “There’s a lot of cash on the sidelines, and people don’t want to miss the rally. Once markets fully reopen, I think we’ll see primary issuance resume quite quickly.”

Article content

Earlier this month, Fitch Ratings placed Qatar and several banks, including QNB, on review for downgrades, citing uncertainty over the country’s security environment and the risk of a prolonged conflict or further damage to oil and gas infrastructure.

Article content

—With assistance from Olga Voitova.

Article content

(Updates with new issues from ENBD in fourth paragraph.)

Article content