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Qatar National Bank aims to refinance US$3b loan by year-end

[DUBAI] Qatar National Bank (QNB), the largest Gulf Arab bank, has approached commercial banks for the refinancing of a US$3 billion loan due next March, saying it would like to complete the deal before the end of 2017, sources familiar with the matter said.

The refinancing could force foreign banks to make difficult decisions as they seek to avoid choosing sides in the diplomatic crisis between Qatar and its Gulf neighbours.

Some banks with operations on both sides are trying to maintain existing relationships with Qatari borrowers.

But they would prefer not to be seen lending to Qatar for fear of disrupting their existing relationships with clients in Saudi Arabia, the United Arab Emirates and Bahrain.

Those three countries cut diplomatic and transport ties with Qatar in June, accusing it of backing terrorism, which Doha denies. Authorities in the three countries have not publicly warned foreign banks against doing business in Qatar, but foreign bankers fear consequences if they do new deals there.

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The UAE, for example, has told banks in its territory to exercise "enhanced due diligence" towards six Qatari banks including QNB, because of the alleged risk of being involved in improper transactions.

The US$3 billion loan which QNB wants to refinance was originally signed in 2015 and provided by over a dozen international banks.

Barclays, HSBC, Bank of Tokyo-Mitsubishi, Deutsche Bank, Mizuho Bank, SMBC and Standard Chartered were among banks participating as mandated lead arrangers.

That loan also saw participation by regional lenders such as National Bank of Abu Dhabi - now First Abu Dhabi Bank - as well as National Bank of Bahrain and Saudi Arabia's Samba Financial Group.

These institutions appear almost certain not to participate in the refinancing, bankers said.

QNB has not issued an official request to banks for the refinancing, but has started discussing options for a loan that would be equal in size and maturity.

The Qatari lender has not discussed the pricing yet and has not hired any banks to arrange the potential deal, the sources said.

Officials at QNB could not be reached for comment on Sunday.

One of the sources, a banker, said he believed one of the aims of the discussions was to gauge interest among banks, so that QNB could come up with contingency plans should any lenders be reluctant to participate because of the crisis.

Last month, QNB raised US$630 million through a Formosa bond issue in Taiwan arranged by Standard Chartered.

With other Qatari banks, it has met foreign fixed income investors during non-deal roadshows - meetings without firm offers of securities - to sound out the appetite of the market for potential bond issues, sources told Reuters last week.


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