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Qatari real estate bonds hit the hardest by diplomatic dispute


Arif Sharif, Bloomberg

The worst-performing bonds in the Gulf last week were two sukuks issued by Qatar’s Ezdan Holding Group QSC.

Shariah-compliant debt sold by the real estate company mainly to private banks and wealthy individuals sank as much as 9.9 percent, pushing the yield up 245 basis points to 7.21 percent, according to data compiled by Bloomberg. The dollar-denominated bonds rebounded Monday as Qatar Finance Minister Ali Shareef Al Emadi said the economy can withstand a rupture of diplomatic ties with a Saudi-led group of Arab nations.

Saudi Arabia, the United Arab Emirates, Egypt and Bahrain broke off relations with Qatar on June 5, citing dealings with Iran and funding of Islamists. That triggered a rating downgrade of Qatar’s sovereign debt by S&P Global Ratings, which said it was reviewing the nation’s credit for further cuts after a one-notch demotion to AA-.

Ezdan’s bonds are held primarily by high net-worth individuals and private banks, according to Abdul Kadir Hussain, the head of fixed-income asset management at Arqaam Capital Ltd. The debt has the lowest investment-grade ranking from S&P and a junk rating from Moody’s Investors Service.

“The selling was quite disciplined initially,” but gathered pace towards the end of the week, Hussain said.

Ezdan’s 2022 sukuk rose 1.7 percent Monday with the yield dropping 39 basis points, while the 2021 security rebounded 1.7 percent.

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