Friday, 03 December 2021 03:44 GMT

Qatar's growing PPP prospects seen paving the way for corporate debt market

(MENAFN- Gulf Times) The improved macroeconomic conditions of Qatar, the growing prospects for the public private partnership (PPP) and North Field expansion have fuelled the debt financing needs of corporate sector, which now seeks relaxation relating to local capital issuance, according to sources.
'The opportunities are across the board, but specifically in the non-financial sector,' a source in an investment entity said, highlighting the need to develop the local corporate debt market.
The Qatari government, responsible for 99% of domestic issuance, continues to issue sovereign bonds despite its limited budget financing needs so that it can maintain a benchmark yield curve to price semi-sovereign and corporate issuances.
Highlighting that the ambit of PPP, which was initially introduced in school projects, is being widened; the source said the role of the private sector is getting enlarged, so would be their funding requirements.
Indications are that the PPP would be introduced in many sectors, especially considering that thrust has been on diversification and already the non-hydrocarbons sector's contribution are gaining traction.
The Investment Promotion Agency Qatar chief executive Sheikh Ali Alwaleed al-Thani, had earlier told the Qatar Economic Forum that the country is 'now looking at expanding this (PPP) programme across different sectors.'
According to the Ministry of Commerce and Industry, other projects proposed to be rolled out using the PPP model involve state-of-the-art technologies and industries, such as solar energy-related projects and the construction of storage spaces in the new free zone area. This new PPP law applies across all industries and sectors.
The PPP Law aims to allow the public sector a new perspective in managing national projects in order to enhance the proficiency, productivity and sustainability of such projects and handling the same in a cost efficient manner, according to law firm Al Tamimi.
A Qatar Financial Centre report had said large corporates in the energy, transport and logistics sectors make 'ideal' candidates for issuing bonds and sukuk since they require 'substantial' financing for working capital over long term.
Qatar's North Field expansion, through which it is expected to raise Qatar's liquefied natural gas or LNG production capacity from 77mn tonnes per annum (Mta) to 110Mta by 2025 and 126Mta by 2027, would also call for firms in the supporting sector to expand their services for which debt plays a crucial role.
Considering the present scenario, relaxation in norms relating to issuances could attract the corporate houses to look for alternate funding routes, sources said.
'Issuing debt instruments will help diversify the company's funding base, and it is also a less restrictive compared to bank financing as the debtors have no say over the running of the business – granting them significantly greater freedom of operations,' the QFC report had said.


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