A Bahrain-based investment bank has raised $60 million in an oversubscribed floating rate note (FRN) issue. It could prove a precursor for similar operations involving other Gulf borrowers, bankers say.

Bahrain International Bank (BIB) came to the market to raise $50 million, but increased the issue to $60 million to meet demand. The three-year FRN is repayable at 11/4 per cent over the three-month London interbank offered rate (Libor). This is considered by bankers to be 'a reasonable margin'. The notes are listed in Luxembourg. The offer closed on 30 August.

The arrangers and lead managers were the Bahrain-based ABC Investment & Services Company, Chemical Investment Bank and The Arab Investment Company.

The operation is technically classed as a securities offering, giving all participants manager status. The managers include United Saudi Commercial Bank and Bank al-Jazira, both of Saudi Arabia; the Bahrain-based Bank of Bahrain & Kuwait, Al-Ahli Commercial Bank, Gulf International Bank and National Bank of Bahrain; the Netherlands' ING Bank; Arab African Bank; Emirates International Bank and The National Bank of Ras Al-Khaimah; and France's Banque Paribas.

In a 23 August statement, BIB said it was 'believed to be the first unsecured fund raising successfully carried in the Eurobond markets by a Gulf-based financial institution in recent years'.

The FRN could be followed by other loans, BIB's managing director for corporate finance David Knights said in a telephone interview on 29 August. 'We expect we will be in the market at some stage with a follow-up FRN or some similar instrument,' Knights said. 'It will launch our future activity in the Euromarkets. This will not be regular...perhaps every other year.'

In 1993, BIB raised $110 million in the Euromarkets through a structured offering, underwritten by Morgan Stanley. 'The purpose of this (FRN) was to address the position between each end, between the long-term, 10-year loan raised in 1993 and our inter bank borrowing,' Knights said.

Other banks in the Gulf have shown interest in the instrument and could follow BIB to the Euromarket.