QATAR BOND MARKET Provides Opportunities for Long–term Investors

Mr. R. Seetharaman, Doha Bank Group CEO delivered a keynote address in fixed income event hosted by Thomson Reuter’s on 15th May 2011.This event was held at La Cigale, Doha. Top business professionals, key industry players in fixed income market and experienced bankers participated in this event. Mr. Seetharaman, Doha bank Group CEO spoke on “GCC economy and emerging trends in GCC Bond Market”.

Speaking on the Occasion Mr. Seetharman highlighted the economic outlook of GCC economy. He stated that “GDP at current prices in 2011 will rise to 1.4 trillion reflecting a growth of 29% over 2010. Qatar’s real GDP will grow at a rate of 20% in 2011. The current account balance of GCC will be 124% of GDP at current prices on account of high oil prices in 2011”

Mr. Seetharaman highlighted the current scenario of GCC Bond market. He stated that “The total size of bonds issued in 1st Quarter 2011 for GCC bonds was close $20bn with Qatar Govt being the leading issuer amounting to $13.7bn.The other major bond issues in 2011 where from International petroleum Investment company – $4.3B, Mubadala Development company-$1.5B and Emmar properties – $0.5B.The refinancing requirements of regional corporations in the coming years is expected to increase, with debt more than $60bn debt maturing in next 2 years. The soaring high yields in 1st quarter of 2011 due to crisis also provided opportunities. Massive projects and huge Infrastructure development in GCC will create demand for bonds”

Mr. Seetharaman mentioned the key developments in Qatar Bond market. He stated that “Qatar has come up with 4 Sovereign bond issues in the last 2 years with the recent issue in Jan 2011 for $13.7bn.Earlier government bond issues were mainly denominated in dollars however Jan 2011 and June 2010 bond issues were denominated in Qatari riyals. More bond issues in Qatar riyal will help in development of Qatari riyal yield curve.Corporates in Qatar also have tapped the opportunities in the bond market. Qatar exchange will allow Bonds / sukuk trading in 2nd quarter of 2011”

Mr. Seetharaman explained the structural changes needed in GCC Bond market. He stated that “With bond being a new trading instrument in Qatar exchange there is a need to hold seminars and knowledge sharing sessions. The development of yield curve is necessary for bond market. Fixation of benchmarks for bonds is also essential. To address hedging requirements the development of interest rate derivatives market also becomes vital.”

Mr. Seetharaman highlighted the challenges of GCC Bond market. He stated that “Secondary market for GCC bonds needs to be vibrant. GCC also needs to improve transparency for bond investors and deepen institutional investor base. A favorable regulatory environment should prevail to encourage various classes of investors. A vibrant bond market will also support pension fund industry”

Mr. Seetharaman described the issues pertaining to transparency prevailing in GCC bonds. He stated that “Improved transparency can help different classes of investors. Improved transparency will arise from enhanced regulatory framework and a well developed secondary market.”

In his concluding remarks, Mr. Seetharaman said that Qatar will emerge as a major bond market in GCC in the coming years as it provides opportunities for long-term investments.