Qatar’s local currency debt to gain traction; more banks to issue dollar-denominated debt: Al Rayan Investment
Akber Khan, Al Rayan Investment acting chief executive officer. PICTURE: Shaji Kayamkulam
“Between now and the end of 2025, we should have two or three more Qatari riyal sukuk issuances,” Akber Khan, acting chief executive officer of Al Rayan Investment, told Gulf Times in an interview.
Having debt issued in local currency is an important pillar to the development of any capital market, he said, adding Qatar was 15 years ahead of the region when it began to issue US dollar sovereign bonds and established a yield curve. The proceeds of those bonds were used to build out LNG (liquefied natural gas) infrastructure.
“After Estithmar, we are working with a second sukuk issuer,” Khan said, adding the first issuer of a sukuk in Qatari riyal was a corporate.
Estithmar Holding had issued a QR500mn sukuk, marking the first corporate issuance denominated in Qatari riyal, under its QR3.4bn programme.
The three-year sukuk, maturing in September 2027, offers an 8.75% coupon and drew interest from government and non-government investors, including banks, insurers, asset managers and family offices.
“While risks are certainly very different, the 8.75% coupon is far more attractive than the prevailing deposit rates,” he said, adding that with expectations of further cuts in interest rates, demand for this sukuk is set to increase further.
QIIB had raised $500mn through sustainable sukuk in the first quarter of this year; the sovereign (Qatar) came out with twin green bonds of $1bn and $1.5bn in the second quarter of 2024, and Commercial Bank raised $265mn through Green bonds in the third quarter of 2024.
Khan said that indications are that banks would also begin to issue local currency sukuk. He expects one or two issuances from the local banks in US dollars in the next month as well.
Global credit rating agency Fitch had recently said in a report that the bank issuances are expected to continue as they replace upcoming maturities and strive to diversify their funding bases. Qatar’s DCM (debt capital market) reached about $130bn outstanding at the end of first half (H1) of 2024, same as end-H1-2023, with sukuk at 10% (H1-2023: 13%).
Qatar’s debt capital market (DCM) issuance is expected to be broadly stable amid the government’s continued debt repayments and limited corporate DCM access, Fitch had said.
