Manama: The Kingdom of Bahrain successfully priced a Rule 144A/RegS international USD 1 billion 6.875% Oct-2025 sukuk offering. The Kingdom opted to close at $1billion against $2.1 billion offering from investors.
The financing exercise forms part of the Kingdom’s prudent approach in managing its funding requirements. The transaction received strong global investor interest, with the orderbook peaking at around USD 2.1 billion (2.1x of the total amount raised) from more than 100 investors.
The Kingdom embarked on 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 opted to pursue the most optimal cost-efficient debt capital markets format, issuing a single tranche sukuk offering, taking into account 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 Kingdom elected to release price guidance at ‘7% area’ on 28 March 2018 at GCC opening hours. The orderbook recorded strong momentum and was sufficiently covered by 11:00am UK time, enabling the Kingdom to tighten final pricing to yield 6.875% and price a successful USD 1 billion sukuk offering.
The offering attracted a globally diversified orderbook from both Islamic and conventional investors, with 59% of the notes distributed in MENA, 16% in Europe, 14% in UK, 9% in the US and 2% into Asia. Distribution by investor type comprised 63% of Banks/Private Banks, 33% of Fund Managers, 3% of Pensions and Insurance, and 1% others.
The Kingdom of Bahrain continues to benefit from a strong bid to its sukuk securities, as evidenced by the new issuance which priced inside the Government’s conventional bond yield curve.
“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”, Salman Alkhalifa, Executive Director of Banking Operations at the Central Bank of Bahrain, said.
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.
