Qatar doesn’t need you and should say so
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Qatar doesn’t need you and should say so

If Qatar does go ahead with a bond, it needs to be the one being selective about which banks it will work with.

Several bankers told GlobalCapital last week that they would think carefully before pitching for or accepting a mandate for a Qatar bond, even if it could be the kind of $9bn beast that they would usually jump through hoops to bag. 

Bankers have said they may need to weigh business with Qatar against deals with Saudi Arabia and the United Arab Emirates (UAE). 

The aces up Qatar’s sleeve, however, are the three big international banks that already have substantial Qatari ownership — Barclays, Credit Suisse and Deutsche Bank. 

While not at the top of the CEEMEA bond arranging league tables, an honour currently held by JP Morgan, Citi and HSBC, these are nonetheless three banks with strong emerging markets franchises and a long history of placing bonds in these markets. 

Deutsche Bank holds fifth position and Barclays ninth. And demand for Qatar bonds, even with the current turmoil in the Middle East, would be so great that the paper would more or less sell itself. The last bond Qatar placed in May 2016 — also a $9bn deal, led by HSBC, JP Morgan, Mitsubishi UFJ and QNB Capital — drew a $20bn book.

EM bankers have said that it would send the wrong message if Qatar does not mandate a wider array of banks. They claim excluding banks with strong links to Saudi Arabia, the UAE, Bahrain and Egypt, the countries that cut diplomatic ties with Qatar in June over its alleged links to Islamic extremist groups, would indicate to the market that it is not business as usual in Qatar.

This, they suggest, would be more widely damaging than concerns about the placement of a bond itself.

But any fool knows it's not business as usual for Qatar. You do not need to scrutinise a bond mandate for proof.

In the bond markets, Qatar has a simple way to raise funds, especially if borrowing from its usual banks is taking a hit: take control of the situation, and so avoid public spats about who will work with the country until the fuss blows over.

If Qatar wants to raise funds, it can solve the problem by mandating banks that will certainly have no issue arranging the deal, and being upfront and transparent about why it has chosen these banks this time round. 

Banks that may have a problem with the deal should not even be invited to pitch. Qatar should dump the banks that may not want it first, safe in the knowledge that later down the line they will be back when it calls.

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