It was announced that the US$120 million issue of Islamic Istisna’a Ijarah-based Sukuk for the Durrat Al Bahrain project has been oversubscribed by US$32.5 million as reported by the Liquidity Management Centre (LMC), the Arranger of the Issue, and Kuwait Finance House, Bahrain, which equally owns the project’s development company, Durrat Khaleej Al Bahrain, with the Government of Bahrain.
Underwriting and investment commitments of US$152.5 million have been received for the issue, which starts early January 2005 and matures after 5 years with an option for early redemption. The proceeds from the issue will constitute part of the financing facility for the construction of the US$1 billion Durrat Al Bahrain project – currently the Kingdom’s largest development project.
Bahrain-based LMC is the Arranger of the Issue, which has been underwritten by Lead underwriter Kuwait Finance House in addition to eleven other leading participating / underwriting banks and institutions including: Dubai Islamic Bank, LMC, Bahrain Islamic Bank, Islamic Development Bank, Emirates Islamic Bank, Bank of Bahrain & Kuwait, General Organisation for Social Insurance (GOSI) Bahrain, National Bank of Sharjah and Arab Islamic Bank (Palestine).
The return on the Sukuk is 125 basis points over 3 months LIBOR payable quarterly.
Commenting on the announcement, Mr. Abdulhakeem Alkhayyat, General Manager of KFH-Bahrain said, “We are delighted with the response we received from banks and institutions across the region for this Issue as reflected by the oversubscription. The Durrat Al Bahrain project is a unique and compelling concept, which will not only see the development of a world-class residential and leisure location in Bahrain, but will further support growth and expansion in the Bahrain economy – a key goal for the Kingdom and our Bank .”
Mr. Ahmed Abbas, Acting Chief Executive Officer of LMC commented that, “We are pleased at our appointment to arrange, place and administer this Sukuk Issue for the Durrat Al Bahrain Project, which has been met with an overwhelmingly positive response by the market and strong investor demand. Further, we have been delighted with the support we have received from our shareholders as well as the underwriters and other participating institutions. This is an economically significant project for Bahrain, which we are proud to be actively supporting.”
The Sukuk transaction structure was also endorsed by the International Islamic Financial Market (IIFM). The Sukuk is expected to be listed and traded on the Bahrain Stock Exchange as well as being traded at prevailing market prices, in the over-the-counter market.
