Bahrain issues US$1 billion, seven-year Sukuk offering

Manama : Bahrain yesterday announced it has successfully raised $1 billion from the sale of an international issue of Islamic bonds at 6.875 percent, with the initial price guidance remaining in the ‘7% area’. 

The orderbook, according to a statement released, peaked at around USD 2.1 billion (2.1x of the total amount raised) from more than 100 investors.

Decision to issue “a single tranche sukuk offering”, according to the Kingdom, was taken based on various factors, including the prevalent market backdrop, the performance of recent Emerging Markets debt capital markets issuances as well as investor’s feedback to proactively manage the performance of Bahrain’s securities in the secondary market.

The move followed an extensive and well attended global roadshow, meeting more than 70 investors in Asia, Europe, the Middle East and the United States. Based on investor feedback, the Kingdom elected to issue a single tranche sukuk offering.

Price guidance in the ‘7% area’ was released on 28 March 2018. The orderbook recorded strong momentum and was sufficiently covered to tighten final pricing to yield 6.875% and price a successful USD 1 billion sukuk offering.  

The offering, the statement said, attracted a globally diversified orderbook from both Islamic and conventional investors, with 59pc of the notes distributed in MENA, 16pc in Europe, 14pc in UK, 9pc in the US and 2pc into Asia. Distribution by investor type comprised 63pc of Banks/Private Banks, 33pc of Fund Managers, 3pc of Pensions and Insurance, and 1pc others.

“Bahrain has fostered a long-term relationship with debt capital markets investors, and we are pleased to see strong appetite to the transaction despite the volatile market conditions”, said Salman Alkhalifa, Executive Director of Banking Operations at the Central Bank of Bahrain. 

The Kingdom is expected to raise financings through other sources of funding, including local debt capital markets and potentially could seek to come back to the international debt capital markets at a later stage in 2018. 

BNP Paribas, Citi, Gulf International Bank, National Bank of Bahrain and Standard Chartered Bank acted as Joint Lead-Managers and Joint Bookrunners on the transaction.