DUBAI: Qatari Diar Finance, a part of the property arm of the state sovereign wealth fund, plans to launch a government-backed dual tranche bond this week, the first international issue from Qatar this year.
Early yield guidance for the dual tranche benchmark issue is +200 basis points (bps) over 5-year US Treasuries for the five year tranche, and +low 200s bps over 10-year US Treasuries for the 10-year tranche, three sources said on Tuesday.
One source said that there was "scope to upsize".
A benchmark issue usually indicates a size of $500 million.
The proposed issue, backed by a state guarantee and rated AA by Standard and Poor’s, is expected to launch and price this week, sources said. The guarantee covers up to $3.5 billion but two sources said the final size is expected to be $2-3 billion.
"As an investor, you’re taking on Qatari sovereign risk with this issue," said a banking analyst who did not want to be identified by name.
Analysts polled by Reuters expected the cash-rich economy to grow by 16.1 percent in real terms this year after a 8.7 percent rise in 2009.
Qatari Diar has appointed Barclays, HSBC, Qatar National Bank, Standard Chartered and RBS to lead the issue. The roadshow will conclude in Boston on Tuesday, after meetings in London and New York earlier.
In November, Qatar sold $7 billion in bonds in three tranches which attracted a heavily oversubscribed order book. Following the issue, the regional bond market remained shut for months after Dubai’s debt troubles came to light.
The Qatari Diar group is at the centre of a legal row involving Britain’s Prince Charles over its plans to develop a former army barracks site in central London.
Qatari Diar Real Estate owns the United States’ former embassy in London, called the Chancery, and counts the controversial Chelsea Barracks development site among its most high-profile overseas assets.
Kuwait Projects Company, the state’s largest investment company, priced a 10 year $500 million bond last week with a fixed rate coupon of 9.375 percent. —Additional reporting by Carolyn Cohn in London.