Kipco completes $500m bond issue

This transaction marks the first international bond issue by a private sector corporate from the Mena region in 2009, as well as the first US Dollar bond issue by a Kuwaiti institution since August 2007.

The seven year fixed rate note is listed on the London Stock Exchange. The bonds carry a fixed rate coupon of 8.875%, and priced at a spread of 608bps over the US Dollar Mid-Swap curve. The issue was 6.6 times oversubscribed.

The proceeds of the issue will be used to fund the company's strategic business plans and the transaction extends the maturity profile of Kipco's debt liabilities.

The bond issue also continues Kipco's strategy of regularly raising money in the debt market to diversify its investor base, to reduce its overall cost of funds and match its debt maturities to the long term nature of its investments. Both Kipco and the notes issued under its EMTN Programme have a BBB+ rating by Standard & Poors and a Baa1 rating by Moody's.

Commenting on the issue, Kipco's Vice Chairman, Mr Faisal Al Ayyar, said it reflected the global financial community's confidence in Kipco as a reliable investment partner and underlined the company's position as the region's premier holding company.

Al Ayyar said:

"This is a landmark deal because we are the first private sector corporate in the region to tap the international US Dollar bond market in 2009, and the first Kuwaiti institution to do so since the credit crunch began two years ago. The issue will open the door for other institutions from Kuwait and the region. The funds raised will allow us to stagger our maturities, further diversify our investor base and provide the resources to progress our business strategy."

"This latest successful issue off our EMTN Programme is also part of our track record as a regular, tried and trusted issuer of bonds. Kipco is renowned for its proactive approach to funding and this is reflected in our reputation within the global banking community as a company that delivers on its promises. As the region's premier holding company we have a responsibility to lead by example and this is a sign that investors place great value on the way we conduct our business. Above all, the bond's pricing is a great deal for the company and our debt investors," he added.

The bond order book closed at $3.3bn. The allocation was widespread across the globe with UK 28%, Europe 29%, Asia 22%, the Middle East at 12% and Offshore accounts at 9% of the total order book. The issue attracted a wide range of investors including leading fixed income global institutions.

The joint lead managers on the transaction were BNP Paribas, Goldman Sachs and J.P. Morgan.