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Doha Bank plans debt sale; default swaps fall.

Doha Bank QSC, the second-best- performing lender on the Qatar Exchange over the past year, plans to take on debt as investor perceptions of the nation's credit risk improve, the chief executive officer said.

Options include selling senior or subordinated debt in the second half to strengthen the balance sheet by reducing the mismatch between short-term assets and long-term liabilities, CEO Raghavan Seetharaman said in an interview yesterday. Five- year credit default swaps insuring Qatari debt declined nine basis points since December 1 to 57 basis points at 12:38pm in Doha, according to data provider CMA.

"Credit default swap rates are coming down significantly from December," Seetharaman said in his office in the Qatari capital. "It's a good welcome change, so debt procurement is planned."

The decline in credit default swaps comes amid signs of a pick-up in world economic growth with the International Monetary Fund planning to raise its forecast in about three weeks, Managing Director Christine Lagarde said this week. Doha Bank's shares jumped 29 per cent in the past 12 months to 62.50 riyals, as the lender completed a capital increase last year that attracted almost two times more bids than stock on offer.

"Equity comes first, which we already accomplished," Seetharaman said. "Now its time for the debt."

The yield on Doha Bank's 3.5 per cent bond maturing in March 2017 declined 15 basis points, or 0.15 per centage point, to 2.44 per cent last year, compared with a 42 basis-point jump to 3.55 per cent for the HSBC/Nasdaq Dubai Middle Eastern Conventional Financial Services Index.

The bank, which last year opened offices in Australia, Canada, Hong Kong and Sharjah, plans to increase the proportion of assets outside Qatar to 30 per cent from 10 per cent as the domestic market is "grossly over- banked," Seetharaman said. Qatar has 11 domestic and seven foreign banks competing in a country of two million people.

Doha bank plans to open a branch in Mumbai before June after receiving permission from the Reserve Bank of India last month. Seetharaman said he hopes to amass as much as $10 billion of assets in India within three to five years. The bank is also seeking permission to start operations in Saudi Arabia, he said. Doha Bank is expanding abroad along with Qatar National Bank, the country's biggest lender, which bought the Egyptian unit of Societe Generale SA last year. Commercial Bank of Qatar QSC purchased a 74 per cent stake in Turkey's Alternatifbank AS.

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Publication:Khaleej Times (Dubai, United Arab Emirates)
Geographic Code:7QATA
Date:Jan 9, 2014
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