$375m QREIC sukuk, first corporate Islamic bond for Qatar

The Qatar National Bank and Qatar Real Estate Investment Company announced that QNB and QNB Al Islamic, a QNB subsidiary, have been jointly mandated to lead the arrangement of an Islamic financing valued at a total of $375 million for QREIC, which will use the proceeds to fund some of its real estate projects in Doha.

This Islamic financing will involve a sukuk issue - which is a corporate bond that pays a profit return to bond holders in place of fixed interest - and a syndicated Islamic facility. This sukuk will be the first-ever to be issued by a corporate entity from the State of Qatar.

QNB leads first corporate sukuk

Although formally led by QNB and QNB Al Islami, the Sharia-compliant facilities will be jointly arranged by Dubai Islamic Bank, Gulf International Bank and Standard Chartered Bank. This represents a normal spreading of risk for such a large corporate funding exercise. Clifford Chance is advising the banks on both structuring and the legal documentation.

The mandate for QNB and QNB Al Islami was formally signed-off this week by Sheikh Khalid bin Khalifa bin Jasim Al Thani, Chairman and Managing Director of QREIC and Ali Shareef Al Emadi, the acting Chief Executive of QNB, in the presence of senior representatives from QNB, QREIC and the arranging banks. Mr. Ali Shareef Al Emadi commented:

'We take pride in introducing the first corporate sukuk in Qatar. This is clearly a testimony of the market's readiness for more sophisticated products that address the evolving financing needs of companies in Qatar. It also reflects QNB's commitment to providing Islamic finance solutions, thereby providing a new dimension to the Islamic banking sector in the region that holds much promise and growth for the future. QNB's competence has built up significantly over the years. The recent success of the Al Rayyan initial public offer is a clear example of our ability to manage complex pan-GCC transactions.'

For QREIC,Sheikh Khalid bin Khalifa said: 'Once completed, the financing package will play an instrumental role in our next phase of growth as we forge ahead in addressing the urban needs of Qatar. We are happy to be working with leading regional and international financial institutions for this financing. We are also very excited to raise funding through the first corporate sukuk issue from Qatar. We aim to continue being involved in the region's rapidly growing Islamic Finance Market.'

However, this is likely to be the first of many sukuks in the dynamic Qatari corporate sector, and its success will be keenly watched by others in the industry.