The bond issue was “nearly four times oversubscribed”, Salah al-Fulaij, chief executive of NBK Capital, told a news conference. His company was joint lead manager for the sale along with KAMCO, a unit of Kuwait Projects Co (KIPCO).
“Since the onset of the global economic crisis, Kuwait’s bond market has been starved of quality bond offerings, so it is crucial that local banks help to stimulate supply,” Burgan’s chairman Majed al-Ajeel said in a statement.
The 10-year bond is subordinated paper rated BBB+ by Capital Intelligence. It was issued in fixed- and floating-rate tranches; in the first five years, the fixed-rate bonds pay 5.65 percent annually while the floating paper pays 3.90 percentage points over the central bank’s discount rate, capped at 6.65 percent. If Burgan decides not to exercise a call option five years after issuance, the coupon on all tranches increases by 0.25 percentage point.
Burgan, which is KIPCO’s commercial banking arm, last went to market in September 2010, raising $400 million with a 10-year dollar-denominated bond.
Corporate dinar-denominated issuance has dominated bond activity in Kuwait since the end of last year, and analysts see scope for the market to expand. ($1 = 0.2813 Kuwaiti dinars)