Gulf Finance House completes USD200 million Sukuk bond issue

The transaction was jointly led and arranged by HSBC and Dresdner Kleinwort with Emirates Islamic Bank and Emirate Bank International, acting as senior co-lead managers.

Marketing commenced on July 3rd and closed on July 10th with the books opening subsequently. The majority of investors' subscriptions were scaled back as demand exceeded the amount required.

The GFH Sukuk is rated BBB- by Standard & Poors and will be listed and traded on the London stock exchange initially, with a proposed dual listing at the Bahrain stock exchange subsequently. The Sukuk is secured by a charge over a floating pool of assets and is priced competitively. The initial price guidance given by the bank was not widened reflecting the strong investor confidence in the Banks Sukuk issue. The proceeds raised from the Sukuk will be used to match fund the investment bank's medium term strategic investment portfolio comprising its investments in the equity of Khaleeji Commercial Bank in Bahrain and QInvest in Qatar.

The transaction was completed despite the jitters in and volatility of the global credit and bond markets earlier this week which were hit by the US sub-prime mortgage crisis forcing various Middle East and international banks to withdraw their Sukuk and bond issues.

Commenting on the success of the GFH Sukuk, Mr. Esam Janahi, CEO and board member of GFH said:

"Obviously, I am very pleased that the confidence of international investors in GFH is such that we were able to complete our Sukuk despite poor market conditions which saw a number of banks in the Gulf and internationally postpone the launch of their Sukuks and bond issues. The issue is priced very competitively bearing in mind the floating nature of the collateral provided. The funds from the Sukuk will be used to fund our medium term investments in two regional financial institutions and this will release funds to expand our proprietary business."

The GFH Sukuk issue follows the success of the bank's secondary listing of US$ 275 million of Global Depositary Receipts on the London Stock Exchange which was completed earlier this month. Whilst no new shares were issued, the GDR exercise has allowed international investors for the first time to invest in a liquid instrument backed by GFH shares.

Mr. Peter Panayiotou, Deputy CEO of GFH added:

"We indicated to our new international shareholders, all of whom are leading western asset management houses or hedge funds managing trillions of dollars, that we would look to the debt markets to fund the growth of GFH's business going forward. That is what we have done and we have moved quickly.

Without a doubt our London listing has put us on the map and the international capital markets know who we are and understand our business model. This has definitely helped us to succeed with our Sukuk at a time when other banks have chosen to postpone their issues. We now have a very strong base of institutional shareholders from Europe and North America and a solid group of institutional investors from Asia and Europe for our Sukuk issue."