$80 million BMA bond oversubscribed three times over

Published February 26th, 2003 - 03:00 GMT

An $80 million issue of Government Islamic leasing bonds (sukuk), made by the Bahrain Monetary Agency (BMA), has been oversubscribed by more than three times. On February 25, the bond’s closing date, BMA had received tenders worth $255.8 million for the issue of Ijara sukuk, which carries a maturity of three years.

The bond’s issue date is February 27 and the maturity date is February 27 2006. The rental return on the sukuk is three percent, to be paid twice a year on August 27 and February 27 each year.

Ijara Sukuk are ideal Islamic financial structures because they are asset-backed securities and therefore can be listed on a stock exchange and be traded. Islamic bonds do not pay interest, which is banned by Muslim law, but they mimic such payments by discounting the bond's selling price or through profit sharing.

The sukuk are being issued by the BMA on behalf of the Government of the Kingdom of Bahrain. With this, Ijara sukuk worth a total of $380 million have been issued by the BMA. Due to the oversubscription, the sukuk will be allocated on pro-rata basis.

The issue carries a rating of A- from international rating agency, Standard & Poor's (S&P). The bonds will be listed and traded on the Bahrain Stock Exchange. They can also be traded at prevailing market prices, over-the-counter through the participating banks. The next issue, of $250 million, will be made in May.

This offering is the fifth issue of Ijara sukuk to be made by the BMA. The first issue, of $100 million, was made in September 2001, while the second, a $70 million issue, commenced in February 2002. The third issue, worth $80 million, was made in August 2002 and the fourth, of $50 million, began in November 2002. — (menareport.com)