Qatar Airways rethinks Indian plans due to foreign ownership rules

Enquiries to start the application process in India were rejected over QIA’s ownership of Qatar Airways, Qatar Airways CEO Akbar Al-Baker said. (Reuters)
Updated 05 September 2018
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Qatar Airways rethinks Indian plans due to foreign ownership rules

  • India now allows 100 percent ownership of India-based airlines, up from 49 percent, but only with government approval
  • Qatar Airways has been interested in investing in IndiGo for several years, though never bought into the airline

NEW DELHI: Qatar Airways is reviewing plans for its own domestic Indian airline due to “confusing” foreign ownership rules and could work with a partner in India or take a stake in IndiGo instead, its chief executive said on Tuesday.
The state-owned Gulf carrier has long coveted the Indian aviation market, which is the fastest growing in the world, and in 2017 said it would set up a domestic airline, a year after India eased foreign investment rules for the sector.
“We are really very interested to launch an airline in India, but the regulation is a little bit confusing to us,” Qatar Airways CEO Akbar Al-Baker told reporters in New Delhi.
India now allows 100 percent ownership of India-based airlines, up from 49 percent, but only with government approval. Meanwhile, foreign airlines continue to be limited to 49 percent ownership.
Qatar Airways planned to own a minority stake of the domestic airline with sovereign wealth fund Qatar Investment Authority (QIA) being the majority owner.
However, enquiries to start the application process in India were rejected over QIA’s ownership of Qatar Airways, Baker said.
“We really don’t know what is allowed,” he said.
Qatar Airways could now work with an Indian partner for the domestic airline or alternatively seek a 15 to 25 percent stake in low cost airline IndiGo. If both of those failed then the airline would have to forget about the domestic market, Baker said.
Qatar Airways has been interested in investing in IndiGo for several years, though never bought into the airline.
Qatar Airways would be interested in buying Air India which the government wants to sell a 76 percent stake in, Baker said, adding it would only want the core airline assets and not other parts of the business such as ground handling services.
Any bid for Air India would be dependent on working with a strong Indian partner, Baker said, adding that the airline’s debt was not an issue. India wants to offload about $5.1 billion of Air India’s debt.
“The (Air India) debt can be taken and restructured. The issue is with whom we will partner.”
Qatar Airways expects to release its annual results in two weeks’ time, Baker said. He has previously said the airline made a “substantial” loss, which it blamed on a regional dispute that has banned the airline from four Arab countries.


SABIC prepares to meet investors to offer bond

Updated 25 September 2018
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SABIC prepares to meet investors to offer bond

  • The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25
  • SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale

LONDON: Saudi Basic Industries Corp. (SABIC) is preparing to offer its dollar-denominated unsecured bond to the global market with investor meetings due to start this week.
The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25, according to a filing on the Saudi stock exchange on Tuesday.
The Saudi company is likely to be keen to tap into the heightened international interest in the Kingdom’s financial markets following the lifting of some restrictions on foreign investors’ activities at the start of the year.
SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale, alongside HSBC Bank, Mitsubishi UFG Securities EMEA and Standard Chartered Bank acting as joint lead managers, in its Tadawul note.
The proposed issuance has been well-received so far by analysts with ratings agency Moody’s Investor Service assigning an ‘A1’ rating to the proposed senior unsecured notes to be issued by the financial vehicle, referred to as SABIC Capital II, and guaranteed by SABIC itself.
“SABIC’s A1 rating reflects its strong business position in the chemical sector and its ability to weather industry volatility, particularly given its healthy operational cash flows and conservative liquidity profile,” said Rehan Akbar, a senior analyst at Moody’s, in a note on Monday.

 

The bond is anticipated to be used in part to refinance an existing SR11.3 billion ($3 billion) one-year bridge loan raised in January this year to fund the company’s 24.99 percent stake in the Swiss chemical company Clariant, according to the Moody’s note. All regulatory requirements were completed on this acquisition earlier this month.
Cash proceeds from the bond may also be used to repay a $1 billion bond due on Oct. 3, according to Moody’s.
On Tuesday SABIC confirmed that the bond will be used mainly to refinance “outstanding financial obligations” of the company and its subsidiaries.
Analysts at rating agency S&P Global were also upbeat about SABIC’s outlook, with research published on Monday stating that the company has “strong profitability” via its KSA operations and a “strong” liquidity position.
“The debt issuance is helpful for the credit profile in the sense that it extends the company’s debt maturity profile and strengthens its liquidity position,” said Tommy Trask, corporate and infrastructure credit analyst at S&P Global.
The agency currently assigns the petrochemical firm an ‘A Minus’ rating, with a “stable outlook,” which it said reflects its “view on the sovereign as well as its expectations that SABIC will maintain high profitability under current benign industry conditions.”
S&P Global’s report said margins in the global chemical industry will “largely stabilize in 2018 following several years of improvement, attributable to the increase in commodity chemical capacity.”
However, it also warned that a key risk to credit quality is
the trend for mergers and acquisitions within the sector and the “potential negative impact on credit metrics from funding them with debt.”

FACTOID

SABIC operates in more than 50 countries across the world.