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).