Japan's Mizuho Securities has lost a bond mandate for Saudi Arabia, on top of another for Qatar, banking sources said, highlighting how international banks have been caught up in Qatar's ongoing dispute with its neighbours. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, last year cut diplomatic and transport links with Qatar accusing it of financing terrorism. Doha denies those charges and says the boycott is aimed at stripping it of its sovereignty.
Last week Saudi Arabia and Qatar had more than $100 billion in total orders for competing US dollar denominated bonds. Mizuho Securities, part of Mizuho Financial Group, was offered a leading position in both the $11 billion Saudi issue and the $12 billion Qatar bonds. But Mizuho ended up without either role, losing a possible $1.5-$2 million in fees which would have accompanied the work, as it tried to juggle relationships on both sides of the rift, four banking sources with knowledge of the matter told Reuters.
Mizuho confirmed in a statement that it had withdrawn from the Qatar bond transaction after it had been appointed as a bookrunner, but it declined to comment on Wednesday about its role on the Saudi Arabian bond. Saudi Arabia had chosen the banks for its planned bond before Qatar publicly announced its own list on April 6. However, Mizuho had not informed the Saudis that it was also in the running for the Qatar deal, two of the bankers said, adding this was the reason the Japanese bank was no longer on the Saudi transaction.
Mizuho, which has significant business interests in the kingdom, then decided to pull out of the Qatar transaction. "The (Saudi) Ministry of Finance appoints banks based on their capability, commitments and availability to serve the kingdom," a Saudi finance ministry spokesperson told Reuters. A Qatari official declined to comment on Mizuho's decision, which shows how international banks with significant business ties to Saudi Arabia have been treading cautiously to maintain relations on both sides of the diplomatic and economic crisis.
An expected wave of privatisations in Saudi Arabia and the expected IPO of Saudi Arabian oil giant Aramco, has given banks a money making opportunity they cannot afford to jeopardize.