Bahrain Middle East Bank (BMB) has launched a new collateralised bond programme which will invest mainly in emerging market debt. Called Oasis, the programme is its third such transaction in 12 months.
The bank, working with Morgan Stanley of the US, has set up an investment vehicle, Oasis CBO (collateralised bond obligation), based in the Cayman Islands. Oasis has sold $495 million worth of securities to international investors, as well as issuing a further $85 million in equity that has been bought by Middle East and global investors, including BMB itself. Three-quarters of the funds raised are being invested in emerging market debt, mainly sovereign bonds, with the rest being placed in US securities.
The Oasis securities, which mature in 2011, come in a senior tranche worth $410 million and rated Aa1 by US credit ratings agency Moody's Investors Service, and a junior class rated Baa3. Most were bought by US and European institutional investors. The assets bought by Oasis will be managed by Morgan Stanley Asset Management and Miller Andersen & Sherrard.
BMB, which had a share capital of $107 million at the end of last year, is owned by Gulf Arab investors. Last May, it raised $200 million for investment mainly in US bonds with tenors of up to 12 years, through a programme called GDL. Its second transaction was Pegasus Three, launched in February, which raised $360 million through a commercial paper issue to buy short-dated, mortgage-backed bonds in the US (MEED 14:3:97).
BMB general manager Albert Kittaneh says the bank could set up more such programmes: however, the market is starting to become crowded and BMB is looking at new products. In the Gulf, it is marketing a private equity fund set up by Charterhouse Capital Partners of the UK, and has just bought into a US company. The bank expects to sign a $30 million, three-year syndicated loan this month, to be used for general funding purposes, and is considering the possibility of raising its capital through a rights issue at the end of this year or during the first quarter of 1998.
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