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Al Khaliji, which created a contractor-finance division for the World Cup, and closely held International Bank of Qatar have both an- nounced plans for bond sales of as much as $750m. Al Khaliji counts Qatari Diar Real Estate Investment Co., part of the sovereign wealth fund, as its biggest shareholder and International Bank of Qatar’s chairman is the prime minister.
Masraf Al Rayan, Qatar’s second-biggest Islamic law- compliant lender, projects 20 percent lending growth this year, accord- ing to Chief Financial Officer Mohamed Salam Mursal. Total credit extended by Qa- tari banks surged 24 percent in the year to January, while money supply advanced 11 percent, central bank data show. “Liquidity conditions in Qatar tightened by quite a bit in the second half of last year,” said Nick Stadt- miller, the Dubai-based head of fixed-income research at Emirates NBD, the UAE’s biggest
Local banks have anticipated the construc- tion boom by raising capital to ensure they
can grab their share of loans. Doha Bank sold $500m in bonds after meeting investors in March, while gov- ernment-owned Qatar National Bank raised $1bn in a debt offering last month.
bank by assets. “Between July and Novem- ber of last year, Qatari banks lost deposits and grew their loan portfolios, creating a double squeeze.”
Last month, the central bank said it’s in- creasing risk- reserve requirements to pre- serve lenders’ stability. Banks must hold capital equal to 2.5 percent of their assets within two years, up from 1.5 percent. Qa- tar’s central bank is also issuing about QR4bn a month of treasury bills to banks to enhance their liquidity, the bank’s governor, Abdullah Saud Al Thani, said in a Bloomberg Television interview last month.
Some government projects in Qatar, includ- ing a new airport and seaport, have been financed with the state’s own funds so far. That hasn’t been a problem given rising ex- ports of liquefied natural gas, which made Qatar’s economy the fastest- growing in the world for the past two years, according to the International Monetary Fund.
Last year, gross domestic product surged 15 percent, according to the government’s planning office. While the government says economic growth will slow this year, GDP is still forecast to increase 5 percent. Qatar’s oil and gas exports will average $83bn a year between 2011 and 2016, according to
a government report released last year. “They’re in the incredibly enviable position of not actually needing to borrow anything,” said Akber Khan, an asset management di- rector at Al Rayan Investment in Doha. “The government could equity-fund their entire plans if they wished, but borrowing makes for a more efficient business model and en- hances returns.”
Qatar plans to invest $65bn in infrastruc- ture between 2011 and 2016, according to Beltone Financial, a Cairo based investment bank. The country budgeted more than QR40bn ($11bn) for infrastructure for the 12 months ending March 31, and won’t cut this amount for the next fiscal year, Prime Minister Hamad Bin Jasim Bin Jaber Al Thani said January 23.
“The volume of projects will lead to signifi- cant demand for trade finance products from our local and international customer base,” according to Simon Penney, the chief execu- tive officer for the Middle East and Africa of Edinburgh-based Royal Bank of Scotland Group Plc.
HSBC Holdings, based in London, lent money to the $10.3bn Barzan gas project last year and was a joint lead manager for Qatar’s $5bn sovereign bond offering, according to
Abdul Hakeem Mostafawi, who heads the bank’s operations in the emirate. “We will look into opportunities of project financing or funding” and may advise the government, Mostafawi said in an e-mail.
Barclays, Bank of America Corp and Stand- ard Chartered, which participated in a $7.2bn syndicated loan for Barzan last No- vember, are also among the foreign banks that have financed Qatari ventures.
“I don’t think there are any risks to finding funding for these projects,” said Perihan El-Husseini, an economist for Beltone, who authored a report on Qatar entitled “Money supply growth barely meets demand for credit,” released last month. “If they can’t find it domestically, they will probably find it from abroad.”
gif 2012 May Global Islamic Finance 35
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