Qatar’s growing PPP outlook paves the way for corporate debt market
Improving macroeconomic conditions in Qatar, growing prospects for public-private partnership (PPP) and the expansion of North Field have fueled the debt financing needs of the corporate sector, which is now seeking easing on the issue. local capital, according to sources.
âThe opportunities are general, but specifically in the non-financial sector,â said a source within an investment entity, stressing the need to develop the local corporate debt market.
The Qatari government, responsible for 99% of national issuance, continues to issue sovereign bonds despite its limited budget financing needs in order to be able to maintain a benchmark yield curve to price semi-sovereign and corporate issues.
Stressing that the field of PPP, initially introduced in school projects, is being widened; the source said the role of the private sector is expanding, as are their financing needs.
Everything suggests that the PPP would be introduced in many sectors, especially since the emphasis has been placed on diversification and the contribution of the non-hydrocarbon sector is already gaining ground.
The director general of the Qatar Investment Promotion Agency, Sheikh Ali Alwaleed al-Thani, told the Qatar Economic Forum earlier that the country “is now considering expanding this program (PPP) to different sectors”.
According to the Ministry of Trade and Industry, other projects proposed for deployment using the PPP model involve cutting-edge technologies and industries, such as projects related to solar energy and the construction of public spaces. storage in the new free zone. Region. This new law on PPP applies to all industries and sectors.
The PPP law aims to give the public sector a new perspective in the management of national projects in order to improve the competence, productivity and sustainability of these projects and to manage them profitably, according to the law firm Al Tamimi.
A report from the Qatar Financial Center said that large companies in the energy, transport and logistics sectors are “ideal” candidates for issuing bonds and sukuk because they require “substantial” financing to do so. long-term working capital.
The expansion of North Field in Qatar, through which it is planned to increase Qatar’s liquefied natural gas or LNG production capacity from 77 million tonnes per year (Mta) to 110 Mta by 2025 and 126 Mta by 2027 would also call on companies in the support sector to expand their services for which debt plays a crucial role.
Given the current scenario, easing emissions standards could prompt companies to seek other avenues of financing, sources said.
âIssuing debt instruments will help diversify the company’s funding base, and it’s also less restrictive compared to bank funding because debtors have no say in how the debt is managed. company – granting them significantly greater freedom to operate, âthe QFC report said. .