EM Credit Notes: QNB: Expanding its international footprint

QNB, Qatar’s banking powerhouse, continues to strengthen its presence in the widerMENA region. International expansion remains at the top of the bank’s strategic agenda and should support profitability and future growth prospects. Fundamentally, we believe QNB stands out as one of the best credits out of the GCC and looks well positioned to benefit from Qatar’s large-scale infrastructure projects. QNB is our preferred Qatari bank and we maintain a constructive view on the credit. The bank has tapped the markets twice over the past six months. The last two bond issues have underperformed reflecting, historically tight spreads and investors’ hunt for higher
yield. While current valuations do not leave much upside QNBK18 and QNBK20 trade with c. 50bp spread over Qatar’s sovereign curve, which might be interesting to investors seeking a higher premium without a meaningful increase in risk exposure.