This month has seen another flurry of activity in a bid to squeeze more activity from the last month of the year. Paul McNamara reports
Why would a bank that was having the best year of it life, and producing spectacular profits, wish to raise debt? The answer seems to be that is would simply be handy to have it around in case the need arises to dip into the funds.
Such was the case with the three-year $300m Standby Commodity Murabaha financing that was launched by Gulf Finance House, the Islamic investment bank based in Bahrain. The final amount of the Financing was increased from its launch amount of $100 million and was concluded at $300 million.
The rate of return is three or six month LIBOR +105bps and the facility is based on LME metals purchase by GFH using agency agreement with WestLB.
The financing was fully underwritten by Raiffeisen Zentralbank ?sterreich AG and WestLB AG, London Branch, the mandated lead arrangers and bookrunners. WestLB is acting as facility agent and Dawnay, Day & Co Limited, is the commodity supplier.
The financing achieved a wide geographic placement with a total of 33 banks participating. Approximately 20 per cent of the financing was subscribed by European investors, 60 per cent by investors in the Gulf region, and 13 per cent in the MENA region and a further seven per cent was subscribed by Asian investors.
Of course this facility will look rather like a tiddler when it is compared the Nakheel deal that ended up clocking in at $3.52 billion. Once again Dubai Islamic Bank (DIB) was at the forefront of this deal. DIB has been the lead manager on most of the big issues to come from the Middle East of late.
The $2.5 billion Nakheel Sukuk, which was increased by over $1.02 billion, was well received by investors around the world and received commitments of $6 billion. This makes it the world's largest and it ranks amongst the top 10 convertible capital markets issues globally.
Allocation was predominantly to Europe (40 per cent) and Middle East (38 per cent) investors with the rest going to other parts of the world. Broad distribution to different investor classes includes banks, fund managers, private banking clients, insurance companies and hedge funds.
More detail has emerged since we reported last month on the Aldar Properties Sukuk. It appears that the shareholders have given the go ahead for the convertible Sukuk the company intends to issue. The precise size of the Sukuk will be decided by market appetite and pricing, and the company intended to raise up to $3.5 billion to meet its growing financial needs including mega real estate developments announced recently.
Following the trend towards issuing convertible Sukuk, this issue is likely to appear in the first quarter of next year and will be convertible into shares within three to five years.
Meanwhile the ever active Kuwaiti market was in the spotlight when it came to light that Khabary Holding were to launch a Sukuk worth $1.73 billion. Khabary Holding is a 10 per cent held subsidiary of the Investment Dar Company. The Sukuk is to fund a project called Khabary Fahaheel Future City. Investment Dar is said to be helping put the deal together.
Also in Kuwait, the Lagoon City Musharaka Sukuk road show launched in Bahrain. This issue is lead managed by the Liquidity Management Centre and Emirates Islamic Bank and will be used to fund the Lagoon City residential and commercial real estate development as part of the broader Kheiran Pearl City project. This issue is also relatively modest in size at $125 million.
If it were not for the regular monthly issue of the Central Bank of Bahrain's short-term Islamic leasing Sukuk then the only issue for of Bahrian would have been the GFH issue. As it happens the CBB short term Ijarah was oversubscribed by 110 per cent. The expected return on the issue is 5.35 per cent. This is issue No. 15 of the short-term Sukuk Al-Ijarah Islamic leasing Sukuk.
Meanwhile, over in Malaysia, EP Manufacturing Berhad has issued Murabahah Notes Issuance Facility/Islamic Medium Term Notes for $11 million with a tenor of five years and lead managed by Amanah Short Deposits Berhad. EP Manufacturing is involved in the manufacture, fabrication, production of, and trading in, engineering plastic components.
AmMerchant Bank Berhad has also helped Boon Koon Berhad issue $28 million worth of Islamic Commercial Paper/Islamic Medium Term Notes Programme. Boon Koon is an investment holding company with subsidiaries involved in the manufacturing and assembly of commercial
vehicles and the provision of its related services. The paper has a seven year tenor.
United Overseas Bank helped Syarikat Pengeluar Air Sungai Selangor (SPLASH) issue Murabahah Commercial Paper/Murabahah Medium Term Notes Issuance Programme worth $123 million with a tenor of 20 years. SPLASH is a single purpose company established to undertake the operations and maintenance of the existing water treatment facilities at Bukit Badong and Sungai Selangor.
The England Optical Group has also issued a Murabahah Underwritten Commercial Paper Programme with a tenor of seven years and worth $17 million, lead managed by Affin Merchant Bank and Amanah Short Deposits. The England Optical Group provides services to opticians and contact lens practitioners.
OCBC Bank has issued Reedemable Islamic Subordinated Bonds worth $56 million. OCBC Bank lead managed the deal itself which has a 15 year tenor.
© Banker Middle East 2006
