Doha Bank QSC plans to issue a 2 billion riyals ($549 million) Tier 1 perpetual bond by the end of the first quarter 2014 to support the lender’s growth.
The bank will seek shareholder and regulator permission for the offer, it said in a statement to Qatar’s stock exchange today. The notes will be callable after six years.
Banks in the Persian Gulf are increasingly turning to Tier 1 bonds to boost capital. Emirates NBD PJSC and Dubai Islamic Bank PJSC (DIB) each raised $1 billion in the first half of the year. Qatari banks will see sustained lending growth over the next few years, Standard & Poor’s Ratings Services said in June.
The proposed bond would strengthen the Qatari bank’s lending capacity ahead of an anticipated boom in various economic sectors in Qatar, Chairman Sheikh Fahad Bin Mohammed Bin Jabor Al Thani said, according to the statement. Qatar, holder of the world’s third-largest gas reserves, is planning $200 billion of investments in stadiums, roads, public transportation and a new city of 200,000 before hosting the 2022 soccer World Cup.
The bond issuer will be either Doha Bank or a 100 percent owned special-purpose vehicle, the lender said in the statement. Tier 1 capital is used to cushion lenders against losses. Doha Bank, Qatar’s fourth-largest lender, is rated A- by Standard & Poor’s, A2 by Moody’s Investors Service, and A at Fitch Ratings. The lender’s first-half profit grew 1.1 percent compared with a year ago.
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