Debt Markets: Recovery Promising But Still Elusive

Qatar Islamic Bank's decision to delay its US$500mn sukuk issue is disappointing, suggesting that the contagion over the Dubai World crisis is still in play. We feel that this contagion is misplaced, with Qatari sovereign yields and CDS spreads all agreeing with our own sovereign risk ratings, which puts Qatar at the top of the tree not only in the MENA region, but also globally. If QIB does issue over the coming months, it should be an attractive play, with yields compressing as investors take advantage of a low-risk asset class which is still paying for its neighbours' mistakes.

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