Qatar National Bank, the Gulf state's largest lender, plans to issue a seven-year bond of at least $500 million in a swift one-day deal to take advantage of favourable conditions in the debt market.

The lender set final price guidance of three per cent for the deal, tighter than price talk of 3.125 per cent released earlier in the day, indicating healthy investor demand. Final pricing could be 2 basis points above or below three per cent.

Arranging banks said order books were over $2 billion in a sales document informing investors of final guidance, which was seen by Reuters.

QNB is expected to print a benchmark-sized deal, typically at least $500 million, taking advantage of low interest rates to lock in longer-term funding which will help the bank extend its debt maturity profile.

"It is not related to a political deal or buyout. My understanding is that it's for general funding purposes only. They want to take advantage of the current conditions in terms of rates," said a senior Doha-based banking source.

"The thinking seems to be that it's better to go to the market now rather than wait for a potential liquidity squeeze down the road."

QNB is one of the Gulf's most acquisitive lenders, with ambitious expansion plans in the region and further afield. It completed the purchase of a majority stake in Societe Generale's Egyptian arm for $2 billion earlier this year.

The bank has also snapped up several banking stakes as part of a regional expansion strategy, and said in December it was looking at a majority stake in one of the top 10 Turkish banks.

QNB last tapped the US dollar bond market in November when it priced a $1 billion long five-year bond, maturing in 2018, at 2.125 per cent. The bond was bid at 2.40 percent on Monday afternoon, according to Thomson Reuters data. The yield on the bond has fallen from nearly 2.60 percent last week.

At initial guidance, the new bond was expected to offer a new issue premium of at least 25 bps, according to calculations by IFR Markets, a Thomson Reuters unit.

Deutsche Bank, HSBC Holdings, JP Morgan, Mitsubishi, Standard Chartered and QNB itself were mandated to arrange the deal.-Reuters