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Markaz, Gulf Bank close bond issuance

By Cinatra Fernandes KD 22 mln issuance oversubscribed by 50%
KUWAIT CITY, Dec 19: Senior officials of Markaz and Gulf Bank announced that they have closed the issuance of Markaz bonds of KD 22 million due in 2016. The Gulf Bank was appointed as Lead Manager after Markaz obtained the approval of Kuwait Capital Market Authority's (CMA) to issue a 5-year bond. Gulf Bank has offered this investment opportunity through its Ultra High Net Worth (UHNW) and Institutional Investors distribution channels. Manaf Alhajeri, Chief Executive Officer at Markaz, said, "Markaz bonds are one of the first of a series of new investment-grade bonds that are being issued by operationally strong Kuwaiti companies before the end of 2011."

With a volume of KD 22 million, Markaz bonds have received an investment-grade rating BBB by Capital Intelligence. Two tranches have been issued within the offering, one paying a fixed interest rate of 5 percent and the other paying a floating interest rate of 2.5 percent over CBK Discount Rate.

Alhajeri stated that the rating was a reflection of the financial prudency shown by Markaz and the sustainable business model developed through 38 years.

Subscription to the bonds has exceeded 150 percent from total issuance. The oversubscription of the new bonds by 50 percent is attributed by the officials to the joint distribution efforts of both institutions and investors trust.

Michel Accad, Gulf Bank 's CEO & CGM remarked, "It is one of the first issues in a long time that has achieved such a wide acceptance from the market."

According to Alhajeri, the high participation of institutional and experienced investors, reaffirms the market confidence in Markaz's Board of Directors and Management and reflects the soundness of the bond structure, as well as the proper pricing of the coupon.

Al-Hajeri also commented on the relationship with Gulf Bank , "We have strong relations with Gulf Bank and we aim to maintain and grow our collaboration. This role has been awarded to Gulf Bank in light of its strong market position as well as our trust in the strength of the Bank's distribution network.

Gulf Bank is a leading financial services provider with a large network of branches and we are confident that together we will reach a wider base of investors."

Accad mentioned that the biggest achievement in this partnership was the response from retail investors. He said, "Usually these bonds are sold to institutional investors and our role has been to expand the type of investors who have been looking for such instruments."

He also highlighted that this was a great opportunity for Gulf Bank to provide its customers with diversified investment opportunities. He said, "Following a lethargic three years in the fixed income sector, we were very pleased to distribute this attractive bond deal. With our newly formed Corporate Finance team, the Bank intends to focus more on Fixed Income instruments and other Capital Markets' business in future."

© Arab Times 2011