NICOSIA, 12 October 2003 — Qatar has sold the biggest Islamic bond offer ever with a $700 million, seven-year issue, tapping an increased appetite among non-Islamic investors for the securities, the Middle East Economic Survey (MEES) reports in its Monday edition.
The floating rate bonds, known as Qatar Global Sukuk (QGS), secured a very favorable pricing of 40 basis points over the London interbank offered rate. That compared with the 385 basis points over US Treasuries Qatar paid for its 30-year, $1.4 billion conventional bond issue in June 2000. The issue was rated “A plus” by Standard and Poor’s, matching Qatar’s sovereign rating. The QGS issue, lead-managed by HSBC and Qatar Islamic Bank, was two times oversubscribed. That prompted underwriters to increase its size from the originally proposed $500 million with 52 percent of the bonds bought by Islamic investors and the balance by others.
“Having a non-Islamic group brings more liquidity to the secondary market, given that Islamic institutions often buy and hold their bonds,” said an HSBC official.