Durrat Al Bahrain gains US $152 million injection of cash
Work restarts on the site south of Bahrain
The US $1 billion Durrat Al Bahrain project has received a $152.5 million injection of funds following the completion of its Istisna’a Ijara sukuk (Islamic bond offer).
Reclamation and construction work has also recently been resumed at the site in the south of Bahrain. Work had been stopped in Ras Al Bar to review the original designs. Drivers are now being told to take extra precautions near the site as work resumes. Access to the beach areas will also be prohibited to ensure public safety. Work will continue at the site until 2008, but some areas are to be opened to the public as stages of the project are completed.
The Durrat sukuk will finance the reclamation and infrastructure for the initial stage of the US $1 billion residential and leisure development. Durrat Al Bahrain is the largest residential development project currently underway in the country.
The Government of Bahrain and Kuwait Finance House equally own the project company, Durrat Khaleej Al Bahrain.
Liquidity Management Centre (LMC) was mandated by the project company and Kuwait Finance House, Bahrain, to act as the arranger and placement agent to the sukuk issue. KFH Bahrain also played a key role in the structuring, arrangement and placement process.
The issue was successful and closed at $152.5 million, $32.5 million oversubscribed. It was underwritten by lead underwriter Kuwait Finance House (Kuwait) in addition to 11 other underwriting financial institutions, including.
The return on the sukuk is 125 basis points over 3 months Libor, payable quarterly, with the sukuk having an overall tenor of 5 years and an option for early redemption. It is the intention of the LMC to list the sukuk on the Bahrain Stock Exchange to facilitate tradability. Abdulhakeem Alkhayyat, chairman of the project company, said, “we are very happy with the closing of the oversubscribed issue and look forward to a successful completion of the project, which will be a significant landmark achievement for the Kingdom of Bahrain. We will ensure a smooth administration and management of the Durrat sukuk during the issue period.”
Aref A. Kooheji, chairman of LMC, felt that the issue’s success reflected the buoyancy in the sukuk market as well as the viability of the project. “It is extremely positive to see Islamic financing instruments continuing to gather momentum in the broader market place. The breadth of investors attracted to the sukuk is ample reward for the extent and versatility of our marketing and placement efforts. On behalf of the organisation, I would like to thank Kuwait Finance House for the faith they have had in us throughout the transaction development process.”
Ahmed Abbas, acting CEO of LMC, added: “This is an economically significant project for Bahrain, with which we are proud to be actively supporting further growth in the domestic economy.”