Qatar Raising $7.6 Billion to Bolster Cash Reserves

Qatar’s sovereign wealth fund is pledging some of its most high-profile European equity investments to raise a $7.6 billion loan that will help the top liquefied natural gas exporter bolster its cash reserves amid plunging energy prices.

The Qatar Investment Authority is in discussions with banks including JPMorgan Chase & Co. and UBS Group AG for a margin loan backed by some of its European equity investments, according to people with knowledge of the matter who asked not to be identified because the information is private. The deal could rank as one of the biggest-ever margin loans in the region.

The fund manages about $295 billion of assets and ranks as the eleventh largest globally, according to the Sovereign Wealth Fund Institute. It has holdings in some of Europe’s biggest companies including London Stock Exchange Group Plc, Volkswagen AG and Glencore Plc, data compiled by Bloomberg show.

Qatar, one of the world’s richest nations per-capita income, raised $10 billion in an April bond sale that attracted around $45 billion of orders. The Gulf monarchy has been impacted by plunging oil prices because most gas prices are closely tied to the cost of crude, which dropped more than 50% in March.

The country is also heading into its fourth year of a Saudi Arabian-led standoff that has weighed on its finances and saw the QIA inject billions of dollars into local banks shortly after it started.

Terms of the loan are still being finalized, and details such as the size could still change, the people said. Representatives for the QIA, JPMorgan and UBS declined to comment.

Trophy Assets

A nation of about 2.8 million residents, Qatar has unveiled stimulus packages worth 75 billion riyals ($20.5 billion) — more than 10% of gross domestic product — to help the private sector mitigate the impact of the coronavirus outbreak. It has also allocated 3 billion riyals to local banks as guarantees to back the finance and economic sectors.

The QIA is among Persian Gulf wealth funds that have built up assets of more than $2 trillion as a cushion for when oil runs out or revenues drop. These funds could see a decline of more than $300 billion this year because of the market turmoil, according to the Institute of International Finance, the industry’s global association.

Some regional funds such as Saudi Arabia’s Public Investment Fund are using the volatility in global markets as an opportunity to broaden its global equity portfolio. The $320 billion fund has snapped up stakes in energy and entertainment firms, which have slumped due to the coronavirus crisis.

Source: Bloomberg

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