Doha Bank defers $1 billion Islamic bond plan

Qatar's Doha Bank has put on hold a plan to sell a $1 billion global Islamic bond to finance investments in renewable energy because of poor funding market conditions, its chief executive said on July 25.
The fifth-largest bank in Qatar by market value had planned to sell the bond in September to fund projects such as setting up an exchange for trading greenhouse gas emissions permits.
"We deferred it. It is not a time to venture for a bond," Doha Bank CEO Raghavan Seetharaman told Reuters in an interview while on a trip to Seoul to prepare for the launch of a representative office in October.
"At this point we put it on hold and wait for global funding markets to calm down." The CEO added that the bank may revisit the issuance plan in the middle of next year.
Islamic bonds, known as sukuk, comply with Islam's ban on lending on interest. Bondholders are instead paid returns derived from underlying assets, such as rent from real estate. The postponement may signal that the malaise infecting conventional markets may be spreading to the Islamic finance market, which until now has been relatively shielded from the effects of the slowing global economy and the US subprime crisis.
Doha Bank, established in 1979, offers a full product range including Islamic banking and has $10 billion in assets and nearly 1,000 staff. Like its peers, it has seen rapid loan growth in recent years under buoyant economic conditions in Qatar.
Doha Bank is expanding internationally through establishing representative offices in Qatar's main trading markets. Those operations are focused primarily on trade-related business.
With oil-rich states looking for new investment targets on the back of record-breaking oil prices, Doha Bank is interested in buying shares in overseas banks and non-banking financial institutions, as well as opening an 50:50 asset management joint venture in South Korea, Seetharaman said. It is not currently in negotiations with any South Korean companies for such deals.
South Korea is Qatar's second-biggest trading partner after Japan, and Qatar is the largest liquefied natural gas supplier for South Korea.
Separately, Seetharaman expected oil prices to stay high for the next few years, despite a recent fall by more than $20 from a record peak above $147 hit earlier this month. "Supply is not an issue. A real issue is consumption. It will sustain $150 a barrel." He forecast oil prices to come down to $80 a barrel after three years.