Representatives from the Kingdom conducted investor meetings in Asia, Middle East and London on Monday and Tuesday this week, following which the Kingdom priced an oversubscribed $750 million Reg S Fixed Rate Sukuk offering on Saturday.
The Sukuk offering priced at a spread over mid swaps of 450 bps to yield 6.273%. The maturity date of the certificates is November 22, 2018 and the certificates are rated BBB / BBB by Standard and Poor’s and Fitch. The final pricing achieved was in line with pricing guidance at 450 basis points over mid swaps.
The transaction marks the Kingdom’s 4th transaction in the international Sukuk markets and demonstrates the Kingdom’s commitment to Islamic capital markets.
The order book was driven by broad demand, with allocations of 62% to Middle East investors, 20% to European investors, 12% to Asian, and 6% to investors from other regions. By investor type, 40% of the Sukuk were placed with banks, 22% with asset managers, 20% to central banks, sovereign wealth funds and supranational, 12% to insurance companies and 3% to private banks, and 3% with other investor types. Approximately a third of the offering was placed with Islamic accounts.
“Bahrain’s return to Sukuk market through a longer dated issue is part of our desire to create a yield curve in the international Sukuk market in the same way that we have in our domestic market,” Shaikh Salman Bin Isa Al Khalifa, Executive Director of Banking Operations at the Central Bank, said.
“The strong demand from new as well as existing international investors is a confirmation of investor confidence in our credit, particularly in view of the volatile market backdrop,” he added.
The certificates will be issued by CBB International Sukuk Company (No. 3) (SPC) and are expected to settle on November 22. The certificates will be listed on the London Stock Exchange.
The lead managers appointed for the issuance were (BNP Paribas, Standard Chartered, and Citi Bank)
Bahrain, being an Islamic Finance hub, has established itself as a frequent sukuk issuer in the debt capital markets – this is their 4th international sukuk issue.
Despite a very active calendar with over $3.5billion in competing sukuk supply, Bahrain was able to price its seven-year offering in a historically attractive benchmark yield environment.