The US$250 million issue of Ijara sukuk (Islamic leasing bonds) is the ninth in BMA's Ijara sukuk series. It will bring to a total of US$1.03 billion the value of Islamic leasing bonds issued by the Agency.
Bahrain-based Citi Islamic Investment Bank was, earlier, mandated by the BMA to act as the arranger and structuring advisor for the five-year, floating rate note, while Citigroup Global Markets is the sole bookrunner and lead manager.
Roadshows, being launched on 25th February 2004, will cover the GCC as well as Malaysia.
The sukuk will be listed on the Bahrain Stock Exchange (BSE) and the Luxembourg Stock Exchange (LX). In the future, the issue may be listed on other stock exchanges as well.
It is BMA's debut issue in the global capital market, with all previous issues offered successfully in the domestic market.
"The international market for Islamic financial instruments has developed and matured considerably in recent years and we are seeing an increasing appetite for such instruments," said Mr. Waleed Rashdan, Executive Director, Banking Operations, at the BMA.
The issue is not a new borrowing by the Government of Bahrain, he pointed out. The BMA is refinancing an existing BD100 million (about US$264 million) 30-year conventional bond issue, which was made on 3rd February 1999 and matures on 3rd February 2029.
"It was decided to retire the 30-year conventional bond issue and replace it with a US$250 million, five-year Ijara sukuk issue," said Mr. Rashdan.
"This is being done mainly with the aim of developing the capital market, in general, and the Islamic capital market, in particular."
The upcoming issue is endorsed by the Bahrain-based International Islamic Financial Market (IIFM), a premier international Islamic institution which promotes active trading of Islamic capital market instruments.
The Ijara bonds are guaranteed by the Government of Bahrain, acting through the Ministry of Finance and National Economy. The issue has already been assigned a preliminary rating of A- by international rating agency, Standard & Poor's (S&P). The rating is in line with Bahrain's long term foreign currency rating by S&P and Fitch.
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BMA launches international road show for USD250 million Islamic bond issue
- Bahrain: Monday, February 23 - 2004 at 12:10
- PRESS RELEASE
The Bahrain Monetary Agency (BMA) is set to commence roadshows for its first international Islamic bond issue.
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The Kingdom of Bahrain, the financial capital of the Middle East, hosts the largest concentration of financial institutions in the region.The Bahrain Monetary Agency (BMA), the Kingdom's central bank and single regulator for the financial system, currently licences a total of 362 financial institutions, of which 186 are banks and banking-related institutions, 163 insurance and insurance-related firms and 13 capital market brokers.
Bahrain has also emerged as the world's Islamic banking hub, boasting the highest concentration of Islamic financial institutions, of which 28 are banking institutions and 16 Islamic insurance (takaful) companies, as well as 5 key industry-support organizations.
The BMA is at the frontier of innovation in developing Islamic financial instruments and is the first central bank to issue Islamic bonds. A rolling programme of monthly issuance of short-term securities, Sukuk Al-Salam, has been in place since June 2001. It complements the medium and long term Ijara sukuk, being issued by the BMA since September 2001.
Ijara is the transfer of ownership of a service or asset for an agreed upon consideration. Ijara sukuk (Islamic bonds underpinned by lease assets) can be issued in the capital markets to mobilize deposits for the development of long-term infrastructure projects. They are completely negotiable and can be traded in secondary markets.
Citi Islamic Investment Bank (CIIB) was incorporated in Bahrain in July 1996, as a wholly-owned subsidiary of Citicorp, the largest financial services institution in the world. The core business of CIIB, which operates as the dedicated Islamic banking vehicle of Citigroup, is the origination, structuring and distribution of Islamic banking transactions in trade finance, structured trade finance, leasing, fund management and Islamic bonds.
Citigroup, the pre-eminent global financial services company with some 200 million customer accounts in approximately 100 countries, provides, consumers, corporations, governments and institutions with a broad range of financial products and services.
Bahrain Monetary Agency (BMA)
Contact: Indira Chand/Rima Al Kilani
Tel: (973) 17547522/17547609
Posted by Anne-Birte Stensgaard, Senior News EditorMonday, February 23 - 2004 at 12:10 UAE local time (GMT+4)
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