Commercial Bank, Qatar's largest private sector lender, has witnessed a two-fold over-subscription to its $500mn five-year bond, indicating the growing interests of international investing community on the bank and the country.
The successful issuance and pricing of the unsecured bond, which comes under the bank and its subsidiary CBQ Finance's $5bn European Medium Term Note (EMTN) programme.
The net proceeds of the issue will be used for general funding purposes to support the strategic growth plans of the bank.
Following the end of the roadshow, the transaction saw a strong demand, with an approximate $1bn order book (an oversubscription by twice the offering amount) allowing Commercial Bank to tighten the final spread and the coupon below the initial price thoughts for the transaction, its spokesman said.
The bond was issued at a spread of 212.5 basis points over mid-swaps, carries a coupon of 5% and has a final reoffer yield of 5.22% per annum, reflecting strong investor appetite.
The majority of the investors were from the Middle East (47.4%) and Asia (24.1%), followed by the UK (17.2%) and Europe (10.4%). The investor base is diversified, including some of the world’s leading fixed income investors, with strong demand from fund managers, hedge funds, other banks and Qatari institutions.
"The market demand and attractive pricing is a clear indication of the continuing confidence of international investors in the strength and economic stability of Qatar, and is testament to Commercial Bank’s strategy, financial strength and prudent management," Joseph Abraham, Commercial Bank chief executive, said.
To support the issue, the bank, along with the joint lead managers, had held roadshows to meet investors in London, Singapore, Hong Kong and Frankfurt. During the roadshow, they visited financial institutions, pension funds, asset managers and supranational bodies, and held one-to-one and group meetings in the countries visited.
The issue was arranged and offered through a syndicate of joint lead managers comprising Standard Chartered, Wells Fargo Securities, Barclays Bank, QNB Capital, Al Khaliji and Merrill Lynch International as global coordinator and attracted substantial global interest.
Commercial Bank was the first Qatari entity to establish an EMTN programme with a listing on the London Stock Exchange, and the first Qatari lender to issue a bond in the international capital markets. The bonds are listed on the Irish Stock Exchange and are rated 'A3' by Moody’s and 'BBB+' by Standard & Poor’s.