The Kuwait Projects Company (Holding) – has announced that it has successfully completed the issuance of a US$ 500 million (KD 152.5 million) bond under its US$ 3 billion Euro Medium Term Note (EMTN) Program, with a simultaneous tender of its existing 2019 bonds. The new issue was four times oversubscribed.
The ten-year fixed rate notes, issued at a fixed rate coupon of 4.5%, set a new benchmark for the issuer. KIPCO was met with a solid reception by investors during a global roadshow – covering key centers across Hong Kong, Singapore and London – while the tender period was ongoing, and prior to the launch and issue of its ten-year bond. The success of the trade was evident in the tightening of the initial price guidance of the KIPCO bond by a significant 37.5 basis points to the final issue price, reflecting the global and regional investors’ recognition of the company’s credit quality among a busy period of regional MENA supply.
The bond issuance took place alongside a repurchase of its existing five-year bond maturing in 2019 that carried a fixed coupon rate of 4.8% through a simultaneous any-and-all tender process made to investors. The purchase price was set at 105.25% and 53% of holders opted to tender. KIPCO is the first-ever company to execute a liability management exercise out of Kuwait, and is the first company in the MENA region to do so this year.
Commenting on the transactions, KIPCO’s Vice Chairman (Executive), Mr Faisal Al Ayyar said:
“The order book of around US$ 2 billion is a reflection of the confidence that the global investors have in our sound business model and prudent practices. KIPCO led this journey for Kuwaiti issuers when it began to issue bonds in international markets in 2006. Since then, KIPCO has educated global investors about the fundamental strength of the Kuwait economy and how it stands out in the MENA region and the world. This decade-long effort fulfils our purpose of being a role model for the private sector in the MENA region.”
On his part, Mr Pinak Maitra, KIPCO’s Group Chief Financial Officer said:
“The success of the 2017 bond issue, eleven years after the debut issue, confirms that global investors support regular engagement and reward issuers with fine pricing for this investor interaction. This is reflected in the tightening of the KIPCO 2023 bond by 59 basis points from December 31, 2016. Also, despite a fairly priced tender offer for the KIPCO 2019 bonds, 47% of the holders chose to hold on to their notes, demonstrating demand for KIPCO bonds across the maturity spectrum. The two transactions result in the extension of the average life of KIPCO’s debt to 5.6 years and reduce overall cost of funds.”
The issue attracted 205 investors, including leading fixed income global institutions, insurance companies and pension funds. The bond order book closed at US$ 2 billion. The bonds were allocated across a wide range of quality investors. The distribution profile was very well balanced, with European investors allocated 35% of the transaction and MENA investors allocated 34%, while Asian investors and US offshore/others accounted for 25% and 6% respectively. The notes are listed on the London Stock Exchange.
The joint lead managers on the transaction were Citi, HSBC, J.P. Morgan and KAMCO Investment Company, with HSBC being the dealer manager on the tender process.
KIPCO launched its EMTN Program in 2006. This is the seventh issuance under this flexible arrangement. Since inception, KIPCO has raised over US$ 3 billion in US dollars and Euros, and kept an impeccable record of payment and repayment of interest and principal.