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Bonds: It's a gas for Ras Laffan

Jumbo dollar bond provides rare natural gas exposure for corporate investors

Bond investors are having a tough time of late. Financial institutions have dominated the new-issue calendar for almost two years, spreads are tight, and fixed-income investors have had little opportunity to get near the energy commodities upside that equity investors have enjoyed.

That changed last month when Qatar-based natural gas company Ras Laffan came to market with a $2.25 billion two-tranche bond deal.

At first glance it smacks of project finance, with the proceeds being used as part of a $13 billion five-year programme to build new rail equipment and storage and processing areas in the world's largest natural gas field. Surveys of available gas stopped counting at 900 trillion cubic feet, equivalent to more than 150 billion barrels of oil.

In practice it came off more as a high-grade bond deal where, for once, a Middle Eastern issuer had the upper hand. Ras Laffan is 30%-owned by Exxon, with Qatar Petroleum owning the rest. They have already put $3 billion of equity into the project.

In July, Ras Laffan set up a $2 billion bank facility through Royal Bank of Scotland. But it wanted to sound out the bond market and, while keeping the bank deal open, mandated Lehman Brothers and Goldman Sachs.

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