Qatar is looking to become a regional model for high-value financial services and a hub for investments and business. This year thus far has been a watershed, as the emirate’s debt capital markets have grown to around $130 billion, making Qatar the third largest DCM in the region, ranking behind Saudi Arabia and the United Arab Emirates; the variety of Qatari bond issues continues to expand as well.

“We continue to see strong development and sustainable traction in the local DCM space,” summarizes Aadil Nastar, head of treasury and markets at QInvest, a leading Qatari investment bank, “especially as Qatari institutions continue to capitalize on global demand for conventional bonds and sukuk, backed by Qatar’s high credit ratings and stable fiscal position. This has been reflected in recent local-currency, corporate listed issuance and strong issuance parameters from recent US dollar issuances, both senior and tier 1, predominantly sukuk.” 

The surge in debt issuance has set new benchmarks, both for Qatari sovereign debt and offerings by companies based in the emirate.

In May, the state issued green bonds amounting to $2.5 billion, the first issuance of its kind in the region, consistent with the government’s focus on developing a domestic sustainable finance sector. Priced at the lowest spread recorded by any country in the Middle East North Africa region, the bonds were divided into two tranches: $1 billion with a five-year maturity priced at a 30-basis-point spread over US Treasuries and $1.5 billion with a 10-year maturity priced at a 40-basis-point spread. Subscription demand reached $14 billion, reflecting confidence in the sovereign green financing framework established by the Ministry of Finance.

In October, Ooredoo, a Qatari multinational telecommunications company, issued a 10-year, $500 million bond through its subsidiary, Ooredoo International Finance Ltd.  The notes were issued under an existing $5 billion global medium-term notes program on the Irish Stock Exchange. Priced at 4.625%, the bond’s spread of 88 basis points over 10-year US Treasuries was the tightest ever for Ooredoo as well as one of the lowest for an emerging-market corporate issuer and the lowest for a global telecommunications company on a 10-year bond since 2020.

The offering snagged investors from the US, the UK, Europe, Asia, and MENA.

In the first half, Qatar National Bank Group, the region’s largest bank, completed a Formosa bond issuance under its Euro Medium Term Note (EMTN) program and listed on the Taipei Stock Exchange. A $1 billion bond with a five-year maturity, the offering is part of QNB Group’s strategy to diversify funding from new markets.

Qatar has grown strongly as a center for sukuk, or Islamic bond, issuance this year as well, more than doubling its dollar value in the sector in the first nine months. Estithmar Holding, a large, diversified Qatari public listed company focused on health care, services, ventures, and contracting, successfully issued the first sukuk-denominated corporate bond in Qatari Riyal, listed on the London Stock Exchange. The QAR500 million (US$137 million) issue is the inaugural tranche in a QAR3.4 billion Estithmar sukuk program. 

“This issuance demonstrates confidence in Qatar’s robust economy,” says Estithmar CEO Mohammed bin Badr Al-Sada, “and highlights the ability of the Qatari private sector to expand both domestically and internationally with support from government initiatives that create an environment where companies can develop and thrive.”

Other recent issuers have included Qatar Islamic Bank ($750 million sukuk) and Qatar International Islamic Bank ($300 million Additional Tier 1 Capital Certificates). The QIIB transaction, completed in October, was more than eight times oversubscribed, with a total order book exceeding $2.5 billion, and followed the bank’s $500 million sustainable sukuk issue in January and a similar $250 million offering in July. Qatar Islamic Bank’s five-year unsecured sukuk was priced at 4.485%, 100 basis points over US Treasuries; the order book reached $2.2 billion, indicating the strength and diversity of investors interested in Qatari paper.

Green Bonds Debut

In September, The Commercial Bank of Qatar issued its inaugural green bond denominated in Swiss francs as part of its Sustainable Finance Framework, supporting green projects in the emirate. The offering is the largest-ever Swiss-franc green bond issued in Qatar, the largest such offering from Qatar since 2013, and the largest such offering out of Central and Eastern Europe, the Middle East and Africa since 2021. Significant demand resulted in a 120-basis-points spread, with a final value of CHF225 million.

The flow of new bank offerings should continue as issuers replace upcoming maturities and banks strive to diversify their funding base, Bashar Al-Natoor, managing director at Fitch Ratings Ltd, predicts. In the first half of this year, sukuk issuance more than doubled year-on-year, he notes, while conventional bond issuance increased by 59% to $12.4 billion. The Qatar Central Bank (QCB) regularly issues Treasury bills and sukuk, giving domestic banks a venue to invest their excess liquidity. Early this year, Fitch upgraded Qatar’s bond rating to AA with a stable outlook, the highest credit rating among the Gulf Cooperation Council states.

The diversity of Qatar’s issuance, including its debut sovereign green bonds and domestic Qatari riyal corporate sukuk, has solidified its appeal among global and regional investors seeking conventional bonds, sukuk, and sustainable finance options, says Nastar. Post-issuance performance has been strong, and this positions Qatar’s DCM market well for next year, he adds.

The next stage in attracting wider international participation, Nastar says, will likely accompany further development in Qatar’s swaps and derivatives market. Regulatory support from the QCB for sustainable finance has helped broaden the investor audience, enhancing Qatar’s position as one of the region’s leaders in DCM.

“There is indeed traction in Qatar’s DCM, both in sukuk and conventional bonds,” says Al-Natoor. “The regulator has taken steps to advance the still-developing market in recent years. However, limitations remain, such as the nascent riyal-DCM market, the concentration of the investor base in banks, and corporates generally preferring bank financing over bonds or sukuk.”

At the end of the first half, when the QCB published its ESG and sustainability strategy for the financial sector, it announced its aim to boost sustainable finance and develop ESG sukuk and bonds: another initiative geared to appeal to a section of the global investor audience. ESG debt in Qatar was then $3.8 billion, according to Fitch, with sukuk amounting to 19.5% of the total.

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