Qatar's state-owned oil company, Qatar General Petroleum Corp. (QGPC), is considering turning to the capital markets - rather than the syndicated bank market - to sell a $400 million hybrid securitization/project financing, sources close to the deal said.

Greenwich NatWest is acting as financial advisor to QGPC.

The deal - called NGL-4 No. 1 - will use an offshore SPV and will be backed by future flows of liquid natural gas exports. The offshore structure means that the deal has received a preliminary rating of BBB-plus from Standard & Poor's, one notch above the sovereign ceiling. Ratings are also being sought from Moody's Investors Services.

The transaction is a not a "true" securitization because Qatari law does not recognize the concept of bankruptcy, making full bankruptcy remoteness impossible.

"Because of the lack of a bankruptcy code, by definition this is a different vehicle from the ones done in Latin America, but obviously the rating agencies have looked at the Qatari law issues," one structured finance pro said.

A similar deal, also with Greenwich NatWest as advisor, launched in the bank market in April 1999.

A decision will be made in the next week or so to decide whether the deal will be funded through the bank market or in the capital markets. Following that decision an underwriter will be chosen.

There is already a benchmark for Qatar in the market, after the sovereign issued a $1 billion bond over a year ago, thereby paving the way for both quasi-sovereign and corporate issuers to tap the bond markets.

Given the amount of interest Qatar's sovereign issue elicited, many investors will be keen to buy issues from the country, said John Greco, who trades Qatar for Credit Suisse First Boston in New York. Qatar's 1999 sovereign bond could easily be called "the deal of the year," Greco said, as it was extremely well received by a broad base of investors in both the U.S. and Europe, and has continued to trade up since its launch. But despite its popularity, the paper is still cheap in light of Qatar's Baa2/triple-B sovereign rating, he said.

Also in Qatar's favor is the fact that oil prices have been steadily rising, something that helps both the sovereign deal and will help in boosting the popularity of future corporate deals, particularly QGPC's. The company is Qatar's premier oil and natural gas exporter, a Paris-based source said, and has a worldwide export network.

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