Qatar’s debt, bond market to see 'more movement' in upcoming years

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Qatar is likely to witness more than $101bn in fixed income maturities between 2021 and 2030 with the utmost debt/sukuk redemption to happen in the next five years, according to Kamco Invest.

Kamco Investment Company is a regional non-banking financial investment services company headquartered in Kuwait.

Due to the COVID-19 pandemic, the fiscal pressure from the decline in economic activity and lower oil revenues has resulted in an increase in bond issuances in the GCC in 2020, as it did around the world which were aimed at both business expansion via new issuances as well refinancing needs.

Qatar’s bonds have a stable rating from all leading agencies including S&P, Moody’s and Fitch, while ratings for Saudi Arabia, Kuwait, Oman and Bahrain have suffered as a result of the economic ramifications of the COVID-19 pandemic.

“Apart from the impact from the COVID-19, these downgrades mainly highlighted fiscal pressure due to the fall in oil prices as the GCC countries heavily depend on oil revenues to meet their budgeted spending,” the report, published by the Kuwait-based regional non-banking financial investment services company said.

Doha is slated to see $15.8bn bond and sukuk maturity in 2021, $13.4bn in 2022, $15.8bn in 2023, $16.7bn in 2024, $10.8bn in 2025, $6.1bn in 2026, $7.2bn in 2027, $4.7bn in 2028, $6.1bn in 2029 and $4.8bn in 2030, Kamco Invest said in its latest update.

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“The GCC bond and sukuk issuances witnessed year-on-year gains for the second consecutive year in 2020 and trends for the coming year shows flat to slight decline in issuances in 2021,” the report added.

While the budget spending needs by the government is expected to drive sovereign issuances next year, with comparatively smaller expected deficits in 2021, unlike 2020, “we expect government issuances to decline year-on-year in 2021.”

On the other hand, corporate issuances are expected to fully or partly offset the decline in issuances by governments as better economic environment is expected to result in higher spending by the private sector.

Borrowers are also keen on raising funds due to the low cost of borrowing globally. In addition, with yield on sovereign bonds reaching an all-time low, governments may be motivated to issue new debt and lock in the low cost of debt.

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