Qatari Qtel Group has hired Bank of America Merrill Lynch, Citigroup, ANZ and HSBC to arrange a new transaction worth US$752mn, according to a money manager with knowledge of the deal.
Qtel issued a number of benchmark sized US dollar-denominated bonds in the past, with some reaching maturity over the next few years.
The company has a US$600mn bond yielding 7.875% maturing in June 2019, and more recently, a US$1bn bond carrying a yield of 3.375%, maturing in October this year.
“Because of the fact that the company has a sizeable amount of debt maturing this year, it is likely that the planned issuance could be used for refinancing purposes,” said Waleed Haram, Head of Emerging Market Credit Trading for CEEMEA at Nomura.
He added that Qtel had US$11bn worth of outstanding debt at the end of last year, noting that the company had a net debt to EBITDA ratio of 3.5. “This is reasonable for a telecoms company.”
A few of the banks working on the new deal have previously managed past issuances from Qtel. HSBC worked on a 2023 note, whilst both Bank of America Merrill Lynch and Citigroup managed Qtel’s bonds maturing in 2028 and 2043.
“These tend to be relatively active in the Middle East, so it is not surprising that they end up on repeat transactions,” Haram noted.
The popularity of Qtel is not just confined to the banking sector. There will be significant local demand according to Haram.
“Qtel is also well known abroad, so will attract foreign investors.”
He added however that international investors tended to be more price sensitive, so judging any the level of foreign participation will have to wait.
Part of the reason that Qtel is relatively stable is that it is backed by the Qatari sovereign, which is about 60% owned by various Qatari government entities.