DUBAI, July 7, (RTRS): Kuwait Projects Company (KIPCO), is considering a benchmark-sized bond issue with a 10-year tenor, lead arrangers said on Wednesday, making it the first offering from a Kuwaiti corporate this year.
KIPCO is Kuwait’s largest investment company and its core investments are in financial services, with stakes in Burgan Bank and Bahrain based United Gulf Bank.
Two market sources said early yield guidance is between 9 and 9.5 percent, and one European fund manager said the order book currently stood at $200 million.
Joint lead managers on the deal are HSBC, Citi, and BNP Paribas. Pricing is expected this week depending on investor response. The bond roadshow closed on Tuesday.
KIPCO declined to comment when contacted by Reuters.
Shares in KIPCO were trading 3.2 percent higher at 0815 GMT.
Kuwaiti investment firms have been badly hit by the financial crisis and some have said they would sell down international assets.
KIPCO posted a 49 percent fall in first quarter profit, and said it sees a meaningful recovery by year end..
In June, Moody’s downgraded KIPCO’s issuer rating by one notch to baa2 on asset concentration of its top three holdings and high exposure to financial services.
There is a pipeline of Gulf Arab bond sales waiting to come to market but volatility due to Europe’s debt crisis has slowed issuance from the region, with issuers wary of higher pricing and jittery global investors.
Much of the issuance so far this year has been from government-linked issuers, but capital needs for the region’s corporates should move more companies to issue in the second half of the year, market conditions permitting.
Earlier, Kuwait Projects Co (KIPCO), the country’s largest investment firm, said it has increased its stake in United Industries Co to 71.8 percent by investing in the firm’s rights issue.
UIC has become a subsidiary company of the KIPCO Group. UIC was previously an affiliate company of the group. The announcement follows KIPCO’s purchase of outstanding UIC shares that were available through the company’s recent rights issue,” KIPCO said in a statement on Sunday.
KIPCO owned 28.2 percent of UIC, according to bourse data.