A trio of bond issues close

20 August 2004
Jordan Investment Trust (Jordinvest) completed in the first half of August the placement of three corporate bonds worth a total of JD 57 million ($80 million). The issues include two public placements for Royal Jordanian Airlines (RJ)and a private issue for the local Specialised Industries (SI).

The biggest of the three issues was a JD 33.8 million ($54 million) dinar-denominated bond on behalf of RJ. The bond was offered at a fixed rate of 6 per cent for the first three years, and a semi-annual floating rate for the last two years. The floating rate will be decided towards the end of the fixed-rate period and will be either 250 basis points (bp) over the Central Bank of Jordan (CBJ) rate, or the average of prime rates between selected local banks.

The second RJ bond is an $8.8 million dollar-denominated bond placed at a floating rate of 200 bp over Libor. Subscribers to the RJ bonds included National Bank of Kuwait (NBK), Jordan Kuwait Bank, Housing Bank forExport & Finance, Jordan International Bankand the Social Security Corporation. The successful placement of the two bonds allows the carrier to make the final payments for four A310 aircraft it is buying under a lease finance arrangement from Europe's Airbus. The purchase is part of RJ's overall restructuring effort, which includes the fleet modernisation programme (MEED 4:6:04).

Jordinvest has also completed the private placement of a JD 17 million ($24 million), seven-year bond on behalf of nappy manufacturer SI, a subsidiary of the local Nuqul Group. The issue was placed at a fixed rate of 6 per cent for four years, and a semi-annual floating rate for the last three years. The floating rate will be decided at the end of the fixed-rate period in the same way as the RJ bond. The funds raised from the issue will support a JD 25 million ($35 million) expansion of SI's manufacturing facilities in Amman.

The low interest rates of the last three years have triggered a surge in corporate bonds in the kingdom which has seen Jordinvest complete 11 issues worth a combined JD 180 million ($253 million), estimated to be about 85 per cent of all corporate bonds issued in that period. 'We will issue three more bonds by the end of the year,' says a Jordinvest source. 'These will be for a bank, a utility and a manufacturing company.'

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