Kuwait's Burgan Bank issues record 100m Kuwaiti dinar bond

Kuwait's Burgan Bank said on Thursday it had completed a 100 million dinar bond sale, the largest local currency bond issue ever conducted by a company in the country.

Kuwait's Burgan Bank said on Thursday it had completed a 100 million Kuwaiti dinar bond sale, the largest local currency bond issue ever conducted by a company in the country, and would use the funds to strengthen its capital base after buying Eurobank's Turkish arm Tekfen.

The bond issue was "nearly four times oversubscribed", Salah Al Fulaij, the chief executive of NBK Capital, said. His company was joint lead manager for the sale along with Kamco, a unit of Kuwait Projects Co (Kipco) .

"Since the onset of the global economic crisis, Kuwait's bond market has been starved of quality bond offerings, so it is crucial that local banks help to stimulate supply," the Burgan Bank chairman Majed Al Ajeel said.

The 10-year bond is subordinated paper rated BBB+ by Capital Intelligence. It was issued in fixed- and floating-rate tranches; in the first five years, the fixed-rate bonds pay 5.65 per cent annually while the floating paper pays 3.90 percentage points over the central bank's discount rate, capped at 6.65 per cent. If Burgan decides not to exercise a call option five years after issuance, the coupon on all tranches increases by 0.25 percentage point.

Burgan, which is Kipco's commercial banking arm, last went to market in September 2010, raising $400m with a 10-year dollar-denominated bond.

Corporate dinar-denominated issuance has dominated bond activity in Kuwait since the end of last year, and analysts see scope for the market to expand.

* Reuters