The Bahrain Monetary Agency (BMA) is issuing $80 million of government Islamic leasing bonds (sukuk). The issue of Ijara sukuk carries a maturity of three years. The issue date is February 27, 2003, and the maturity date is February 27, 2006.
The rental return on the sukuk will be three percent, to be paid twice a year on August 27 and February 27 of each year. The sukuk are being issued by the BMA on behalf of the government of the Kingdom of Bahrain.
BMA will receive subscriptions for the sukuk from Tuesday, February 18, 2003 to Tuesday, February 25, 2003. All commercial banks, Islamic financial institutions and national insurance companies operating in Bahrain are allowed to subscribe to the sukuk.
Individual and institutional investors can also subscribe through the participating institutions. The sukuk will be allocated on pro-rata basis. Minimum subscription has been set at $10,000, which is also the par value of each bond.
The bonds will be listed and traded on the Bahrain Stock Exchange (BSE). They can also be traded at prevailing market prices, over-the-counter through the participating banks. The issue carries a rating of A- from international rating agency Standard & Poor's (S&P).
This offering is the fifth issue of Ijara sukuk to be made by the BMA. The first issue, of $100 million, was launched on September 4, 2001, while a second, $70 million issue, which commenced on February 27, 2002, was oversubscribed by 160 percent. The third, $80 million issue, on August 29, 2002, was oversubscribed by 210 percent. The most recent issue, of $50 million, which commenced on November 19, 2002, was oversubscribed by 476 percent.
“Islamic leasing bonds are now firmly established in the government debt calendar,” said Khalid Al-Bassam, deputy governor of the BMA. A rolling program of monthly issuance of short-term securities, ‘Sukuk Al-Salam', has been in place since June 2001. It complements the medium and long term leasing securities.
This bond issue is among a series of new initiatives launched as part of a new BMA strategic plan to develop seven asset classes. These are debt and equity markets, corporate and private banking, remote services, Islamic finance and insurance.
Ijara is the transfer of ownership of a service or asset for an agreed upon consideration. Ijara securities can be issued in the capital markets to mobilize deposits for the development of long-term infrastructure projects. The Ijara securities issued by the BMA are directly and unconditionally guaranteed by the government of the Kingdom of Bahrain. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
