Qatar Petroleum starts investor calls for debut jumbo bond

The state energy company of Qatar will begin investor calls on Monday ahead of what may be one of the year’s biggest corporate bond sales, as it seeks to fund a massive natural-gas project.

Qatar Petroleum is aiming to issue dollar notes with maturities of five, 10, 20 and 30 years, according to a person familiar with the matter. A deal would mark the firm’s first foray into the public bond markets. Bloomberg reported in April that it may seek to raise as much as $10bn.

• The three shortest tranches will be conventional debt, alongside a 30-year dual-listed Formosa bond, the person said
• Citigroup and JPMorgan Chase & Co. will be the global coordinators for any transaction that follows the investor meetings
• Bank of America Corp., Credit Suisse Group, Deutsche Bank, Goldman Sachs Group, HSBC Holdings, Mitsubishi UFJ Financial Group and Qatar National Bank will also managing the sale

The debt will help the Gulf state pump more gas from the giant North Field that extends into Iran’s waters. Qatar – one of the world’s richest countries per capita – is planning to spend $29bn to lift its output of LNG to 110 million tons per annum by 2027 from 77 million tons today.

The expansion will allow it to push further ahead of rival LNG exporters such as the US and Australia and cement its dominance of the global market. Qatar is banking on demand rising in the coming decades as governments shift away from dirtier fossil fuels such as oil and coal.

The company expects demand for LNG to grow at an average annual rate of 3.6 per cent through 2040, according to a bond prospectus seen by Bloomberg.

“The engine of global LNG demand growth will shift from the mature markets of Northeast Asia in the short term to the booming economies of South and Southeast Asia in the longer term,” QP said.

QP made an after-tax profit of QAR18.1bn ($4.9bn) in the first quarter, the prospectus showed. That was an increase from QAR13.3bn a year earlier as a reopening of major economies from the coronavirus pandemic lifted energy prices. Income dropped by 53 per cent to QAR41.2bn in 2020.

The Qatari government itself doesn’t need to return to the debt market any time soon, Ali Al Kuwari, the acting finance minister, told Bloomberg last week. Still, it may choose to take advantage of low interest rates in the US and Europe, which make it cheaper to issue in dollars and euros. The country has sold $34bn worth of sovereign bonds since 2018.

QP is rated AA- or its equivalent by Moody’s Investors Service and S&P Global Ratings. That’s the same as the government, whose dollar bonds have an average yield of 2.3 per cent, according to Bloomberg Barclays indexes.