Qatar-based Commercial Bank’s CEO Joseph Abraham has revealed that the bank is planning to raise at least $1 billion through bond issues in the coming months, as it intends to take advantage of positive market conditions to boost its capital.
It plans to issue its debut foreign additional tier 1 bonds in the first quarter, aiming to raise between $500 million and $650 million, depending on the demand of the market. “On top of that, probably at the end of the quarter, it plans to issue senior bonds worth $500 to $600 million,” said Mr. Abraham.
“We’re seeing if we can diversify the investor base in our bonds, and also the tenor … because I think this is a good time to look at maybe extending the tenor for some portions of the bonds. Qatar’s budget was done at a level of $40 per barrel of oil and now we’re well above that, plus gas prices have also rebounded from their lows, so those are very positive because they give a bit of fiscal flexibility I think for the government.”
The bank announced a 35.6 percent annual decrease in net profit for 2020 this week but expects market conditions to improve in the face of the roll-out of vaccinations and recovery in energy prices this year.
Qatar, a top liquefied natural gas exporter, has based its 2021 budget on an average oil price of $40 per barrel, a conservative estimate that implies that sales may be higher than expected.
Meanwhile, the easing of a three-year regional conflict with some of its Arab neighbors is expected to help economic sectors like trade and tourism.
He further added, “Of course we have the removal of the embargo or blockade of Qatar which obviously is beneficial I would say primarily initially in terms of sentiment.”
The loan growth is likely to be around 4 to 6 percent this year, he said, based on expectations that Qatar’s economy will expand by 2.8 to 3 percent.
“I believe the outlook is positive. You won’t see a sudden uptick in business activity, I think this is a slow, steady uptick, and it’s actually more skewed towards the second half of the year,” concluded Mr. Abraham.