London-based United Bank of Kuwait (UBK) has completed its first medium- term funding transaction with the issue of a $100 million floating rate note (FRN).

'The issue is part of the process by which we are restructuring our liabilities and reorganising our balance sheet,' says a UBK official. 'Due to the manner in which deposits are booked, there is the potential for some liquidity gaps to develop, so we wanted some longer-term liabilities.'

The senior unsecured FRN has a three-year tenor and carried a discounted coupon of50 basis points (bp) over Libor. 'This the sort of pricing we were expecting to get,' says the UBK official. 'There are a lot of factors to be taken into account: the bank's financial performance last year; widening spreads in the face of the Y2K issue, and a general tightening of liquidity.'

The issue was lead managed and fully underwritten by Banque Paribas (London), and co-lead managed by Banque Nationale de Paris, Commerzbank, Deutsche Bank, Dresdner Bank, Arab Bank, The Arab Investment Company and West LB.

The bank official says that the issue is the first step in a broader programme aimed at the diversification of the bank's liabilities. 'We are aiming at having some $500 million out there in the form of medium- term notes, bonds or syndicated loans,' he says. 'Further issues can be expected either in the first or second quarter of next year, and by then we'd be aiming to get 10 bp better pricing.'

UK credit ratings agency Fitch IBCA on16 September reaffirmed UBK's long-term foreign currency rating of BBB+ and financial strength rating of C (MEED 1:10:99).