KIPCO – the Kuwait Projects Company – has announced that it has successfully completed the issue of a US$ 500 million (KD 151.8 million) bond under its US$ 3 billion Euro Medium Term Note (EMTN) Program. The issue was 2.5 times oversubscribed.
The seven year fixed rate notes are listed on the London Stock Exchange and carry a fixed rate coupon of 5%. The issue extends the maturity profile of KIPCO’s debt, reduces its cost of funds and provides flexibility to execute its business strategy. This issue also builds on KIPCO’s strategy of regularly raising money in the local and international debt markets to diversify its investor base.
In a volatile market backdrop, KIPCO was able to capitalize on positive investor feedback to swiftly execute an intra-day trade. The transaction serves as a leading reference point for the region, being the first corporate bond transaction in 2016 out of CEEMEA and the first from the Middle East since October 2015.
Commenting on the issue, KIPCO’s Vice Chairman (Executive), Mr Faisal Al Ayyar said that the success of the transaction reflects the strong reputation that KIPCO enjoys in the global financial community and its confidence in the company’s sound business model despite the difficult economic circumstances across the world:
“Despite challenging market conditions, the demand for our bonds has been overwhelming. The 2.5 fold oversubscription reflects the confidence that the global financial community has in KIPCO’s strategy and ability to deliver on it.”
“While KIPCO’s liquidity remains strong, the proceeds from this bond issue will serve to provide the company with further financial flexibility so that we can continue to pursue our strategic plans.”
The issue attracted a wide range of investors, including leading fixed income global institutions. The bond order book closed at US$ 1.25 billion. The bonds were allocated across a wide range of quality investors. The distribution profile was very well balanced, with European investors allocated for 32% of the transaction, while Asian, UK, Middle East, and US (offshore) investors accounted for 28%, 23%, 14% and 3% respectively.
The joint lead managers on the transaction were BNP Paribas, Citi, HSBC and J. P. Morgan.
KIPCO launched its EMTN Program in 2006. This is the sixth issue under this flexible arrangement. Since inception, KIPCO has raised over US$ 2.5 billion in US dollars and Euros, and kept an impeccable record of payment and repayment of interest and principal.