...and Beirut's debut sukuk draws near

24 October 2003
Beirut's planned $200 million debut sovereign sukuk issue has been submitted to the Council of Ministers for final approval, expected in early November. While the details remain to be finalised, the paper is likely to have a tenor of five years, priced at 400 basis points (bp) over Libor.

The issue represents Manama's fulfilment of its funding commitment made at the Paris II donors' conference in November 2002. The Bahrain-based Liquidity Management Centre (LMC) has been mandated to lead arrange the issue and a group of Bahraini banks is doing the underwriting, at the government's request. 'Whatever the feelings of the local banking community, we just had to get on with it,' says a Bahrain-based banker. 'We were pleased in the end to be able to obtain close to a market rate rather than a heavily preferential one.'

While previous Paris II commitments have been met through conventional bond issues, Manama's is the first to be Islamically-structured, testifying both to Bahrain's commitment to develop the market for sukuks and the instrument's current vogue among both Islamic and conventional investors (see Cover Story). The Bahrain Monetary Agency (BMA - central bank) is close to launching its eighth sukuk, worth $250 million (see above).

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