(Bloomberg) -- Qatar set the size for a three-part $12 billion offering in its first dollar bonds offering in two years, days after estranged neighbor Saudi Arabia issued $11 billion in the biggest sale by an emerging market sovereign this year.
The world’s biggest liquefied natural gas exporter launched $3 billion of five-year notes, priced to yield 135 basis over similar-maturity U.S. Treasuries, according to a person with knowledge of the deal. It will also place $3 billion of 10-year bonds at a spread of 170 basis points and $6 billion of 30-year securities at 205 basis points, said the person, asking not to be identified because the information isn’t public.
The sale comes as the Middle East’s security risk eased after U.S. President Donald Trump hinted that military action in Syria may not be imminent and Russia toned down its rhetoric. A strike against Syria seemed imminent on Wednesday and hurt investor sentiment.
Qatar, in the midst of a diplomatic and trade standoff with a group of Arab nations led by Saudi Arabia, plans to bridge its budget deficit of $7.6 billion with debt offerings. Initial price indications on the bonds were about 50 to 70 basis points wider than where the country’s existing bonds traded, according to data compiled by Bloomberg.
“Qatar has managed the regional boycott very well,” said Hakki Kalsen, a portfolio manager for emerging-market debt at Union Investment Privatfonds in Frankfurt, said before the sale. “At current energy prices, they should have a fiscal surplus.”
Qatar is the world’s richest country per capita on a purchasing power parity basis, and the country is rated three notches higher than Saudi Arabia by S&P Global Ratings. The direct economic and financial impact of the diplomatic rift is now fading, the International Monetary Fund said last month.
The nation’s economic growth is expected to accelerate to 2.8 percent this year, almost double the pace forecast for Saudi Arabia, the world’s biggest oil exporter, according to estimates compiled by Bloomberg. Saudi Arabia’s economy shrank in 2017 after the government scaled back spending. Still, Qatar’s gross domestic product is about a quarter of the size of it neighbor’s.
Al Khaliji, Barclays (LON:BARC) Plc, Credit Agricole (PA:CAGR) CIB, Credit Suisse (SIX:CSGN) Group AG, QNB Capital, Deutsche Bank AG (DE:DBKGn) and Standard Chartered (LON:STAN) Plc helped arrange the sale for Qatar.