Bahrain’s United Gulf Bank will start an investor roadshow in early February for a bond issue under its $1bn Euro Medium Term Note plan, a programme for issuing bond debt.
The bank has appointed the UK’s Standard Chartered and France’s Calyon to manage the issue and is planning to visit investors in the GCC, Europe and Far East, according to bankers close to the deal.
Ratings agency Moody’s Investors Service has given the $1bn plan a Baa3 rating. That rating is based on the likelihood of support from Kuwait Projects Company (Kipco), which owns a majority stake in the bank. Without that assumption of support, Moody’s says the rating would have been Ba1, which is non-investment grade.
Under the terms of the $1bn fundraising plan, if Moody’s downgrades the bond issue programme below Baa3, it will trigger a 1.25 per cent increase in the interest rate payment on the debt.
United Gulf Bank is the investment banking arm of Kipco, which itself issued a $500m bond in October 2009. That deal paid a fixed rate return of 8.87 per cent a year and has a tenor of seven years. The deal was arranged by France’s BNP Paribas, the US’ Goldman Sachs and JP Morgan (MEED 7:10:09).
The deal is the second regional bond issue since the start of 2010. Saudi real estate firm Dar al-Arkan is currently planning to issue a $500m five-year bond.
Sources close to the deal say the initial price guidance is a fixed rate between 10.5 per cent and 11 per cent.
The book-building process for the Dar al-Arkan bond is due to start by 4 February and is due to be completed by 8 February.