Commitments worth $1,200 million were received, mostly from banks in the Middle East but also from insurance companies and from investors in Europe and Asia. The five-year issue achieved a tight pricing of 45 basis points (bp) over Libor, the same as was recently obtained by the Bahrain Monetary Agency (BMA – central bank) for its $250 million sukuk and slightly higher than the 40-bp margin on the $700 million sovereign sukuk issued by Doha in late 2003. The government of Dubai’s 2003 debut conventional bond, also with a tenor of five years, was priced at 47.5 bp at launch.

Lead arrangers on the DCA issue were Citigroup, Dubai Islamic Bank (DIB), Gulf International Bank, HSBC, Kuwait Finance House (KFH)and Standard Chartered Bank, with Citigroup, DIB and HSBC acting as bookrunners. Denton Wilde Sapteprovided legal advice. Other financial institutions taking substantial portions of the paper were ABC Islamic Bank, Arab Bank, Bank Negara – Malaysia’s central bank – Gulf Investment Corporation, the Islamic Development Bank and Mashreqbank.

The sukuk is one of a number in or approaching the market, as the instrument becomes an increasingly popular form of project financing. Roadshows have been completed for the $120 million issue by the project company for the Durrat al-Bahrain resort, a joint venture between KFH and Manama’s Ministry of Finance & National Economy, and sources close to the deal expect the offering to be oversubscribed, with most interest coming from within the region. Pricing is expected by the end of November. Other issues are also likely from the DCA to fund future phases of the airport expansion, and Dubai Investmentsis also planning an issue (see below).

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