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Qatar Steel delays $1.34b loan on credit crunch

DUBAI - Qatar Steel Co, a subsidiary of state-controlled Industries Qatar, postponed plans to borrow $1.34 billion on Thursday because of turmoil in global credit markets.

Qatar Steel is latest Gulf Arab firm to shelve borrowing plans after defaults on US home loans triggered higher corporate financing costs around the world in July and made banks more reluctant to lend.

The company wanted the cash to refinance debt and to expand a plant in Qatar adding 1.4 million tonnes a year to its capacity, Qatar Steel’s General Manager Sheikh Nasser bin Hamad al-Thani told Reuters from Doha.

“We are planning to go back to the market in January or February next year,” he said.

“We have done this because of the current credit market conditions.”

Qatar Steel was not offering bankers a guarantee on the loan from the group’s parent, Qatar Petroleum, which is owned by the government of Qatar, the world’s largest exporter of liquefied natural gas (LNG).

“We can’t price steel the way LNG is priced,” said one banker involved in the transaction, who asked not to be identified.

Banks had advised Qatar Steel to sign up more lenders to underwrite the loan after the credit market turmoil began, he said.

Another Industries Qatar unit, Qatar Fertiliser Co, is likely to postpone a sale of bonds to finance a chemical plant because of the credit crisis, a Qatar Petroleum executive told Reuters last month.

Qatar Steel made a profit of 658 million Qatari riyals ($180.9 million) in the nine months to Sept. 30, an increase of 53 percent over the year-earlier period, according to Industries Qatar data.

It sold 1.23 million tons of the steel during the period.