June 8, 2017 / 9:06 AM / 3 months ago

Qatari bonds extend losses after S&P downgrade, CDS rise

LONDON, June 8 (Reuters) - Qatari sovereign dollar bonds extended losses on Thursday to approach three-month lows and the cost of insuring exposure to the kingdom’s debt rose to the highest level since mid-November, after a credit ratings downgrade.

The Eurobond maturing 2026 fell 0.7 cents, according to Tradeweb data, to 97.7 cents in the dollar, the lowest level since mid-March.

The 2027 dollar-denominated bond of Qatar’s Ras Laffan Liquefied Natural Gas Company fell 1.5 cents to 111.5 cents in the dollar.

Data from IHS Markit showed five-year credit default swaps (CDS) for Qatar widened out 3 basis points (bps) from Wednesday’s close to 92 bps, a seven-month high.

S&P Global cut its rating by one notch to AA- from AA and put it on CreditWatch with negative implications, meaning there is a significant chance of a further downgrade.

The move came after several Arab countries including Saudi Arabia and United Arab Emirates severed diplomatic relations with Gulf Cooperation Council (GCC) member Qatar while also suspending air, land and sea transport and imposing travel bans.

Five year CDS for Saudi Arabia also rose 3 bps from Wednesday’s close to 100 bps, the highest since end-March.

Reporting by Claire Milhench; editing by Sujata Rao

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