Manama, 21 December 2004. It was announced today that the US$120 million Issue of Islamic Istisna'a Ijarah-based Sukuk for the Durrat Al Bahrain project has been oversubscribed by US$32.5 million as reported by the Liquidity Management Centre (LMC), the Arranger of the Issue, and Kuwait Finance House, Bahrain, which equally owns the project's development company, Durrat Khaleej Al Bahrain, with the Government of Bahrain.

Underwriting and investment commitments of US$152.5 million have been received for the Issue, which starts early January 2005 and matures after 5 years with an option for early redemption. The proceeds from the issue will constitute part of the financing facility for the construction of the US$1 billion Durrat Al Bahrain project - currently the Kingdom's largest development project.

Bahrain-based LMC is the Arranger of the Issue, which has been underwritten by Lead underwriter Kuwait Finance House in addition to eleven other leading participating / underwriting banks and institutions including: Dubai Islamic Bank, LMC, Bahrain Islamic Bank, Islamic Development Bank, Emirates Islamic Bank, Bank of Bahrain & Kuwait, General Organisation for Social Insurance (GOSI) Bahrain, National Bank of Sharjah and Arab Islamic Bank (Palestine).

The return on the Sukuk is 125 basis points over 3 months LIBOR payable quarterly.

Commenting on the announcement, Mr. Abdulhakeem Alkhayyat, General Manager of KFH-Bahrain said, "We are delighted with the response we received from banks and institutions across the region for this Issue as reflected by the oversubscription. The Durrat Al Bahrain project is a unique and compelling concept, which will not only see the development of a world-class residential and leisure location in Bahrain, but will further support growth and expansion in the Bahrain economy - a key goal for the Kingdom and our Bank ."

Mr. Ahmed Abbas, Acting Chief Executive Officer of LMC commented that, "We are pleased at our appointment to arrange, place and administer this Sukuk Issue for the Durrat Al Bahrain Project, which has been met with an overwhelmingly positive response by the market and strong investor demand. Further, we have been delighted with the support we have received from our shareholders as well as the underwriters and other participating institutions. This is an economically significant project for Bahrain, which we are proud to be actively supporting."   

The Sukuk transaction structure was also endorsed by the International Islamic Financial Market (IIFM). The Sukuk is expected to be listed and traded on the Bahrain Stock Exchange as well as being traded at prevailing market prices, in the over-the-counter market.

-Ends-

About Durrat Khaleej Al Bahrain :
Durrat Khaleej Al Bahrain, the Project Company, was incorporated in 1999 for the purpose of development and construction of Durrat Al Bahrain Project.  The Project Company is equally owned by Government of Bahrain and Kuwait Finance House, Bahrain.  The Company is currently engaged in the implementation of the project plan in association with contractors and consultants of international repute. 

About Kuwait Finance House, Bahrain:
Kuwait Finance House, Bahrain is a leading provider of Islamic commercial and investment banking services. Established in October 2002 as a wholly owned subsidiary of Kuwait Finance House (Kuwait) -- an industry leader for more than 25 years -- KFH-Bahrain specialises in developing and bringing to market the highest quality Islamically compliant banking and investment products all of which are delivered by a staff of experienced and dedicated professionals with a deep understanding of the market and the customers we serve.  

About Liquidity Management Centre (LMC):
LMC was established in July 2002 as a Bahraini Joint Stock Company with an Islamic Investment Banking License to enable Islamic financial institutions to manage their liquidity through short and medium term liquid investments within Shari'ah guidelines. LMC is now an active player in the establishment of a secondary market for short term Shari'ah compliant treasury products across the GCC region, and has the capability to arrange Islamic investment instruments of varying risk and return profiles at different tenors.

Media Contact:
Financial Dynamics
Laila Danesh
Tel: +973 17537072
Mob: +973 39051111

© Press Release 2004