Order book of $3.6bn for KIPCO’s seven-year $500m bond issue

Overwhelming response reflects global investors’ confidence in KIPCO: Al-Ayyar

Pinak Maitra and Faisal Al-Ayyar

KUWAIT: KIPCO – the Kuwait Projects Company (Holding) – has announced that it has successfully completed the issuance of a seven-year $500 million (KD 151 million) bond under its $3 billion Euro Medium Term Note (EMTN) Program. The demand of $3.6 billion on the order book was KIPCO’s largest ever in international debt capital markets, representing a seven-fold oversubscription.

The bond was issued at a fixed rate coupon of 4.229 percent, the company’s lowest ever coupon rate. KIPCO was met with strong reception by investors during roadshow across Hong Kong, Singapore, the UAE and London. The transaction will extend KIPCO’s debt maturity from 4.1 years to 4.7 years. The issue will also reduce the company’s annual cost of funding by$26 million once the July 2020 notes are repaid.
Commenting on the transactions, KIPCO’s Vice Chairman (Executive) Faisal Al-Ayyar said: “The order book of $3.6 billion reflects the great confidence that global investors have in KIPCO. We have led Kuwaiti bond issuers in the international markets since 2006, and the success of this issuance is an indication of our continued efforts to showcase the strength of the Kuwaiti market to investors around the globe, as KIPCO continues to be a role model for the MENA region’s private sector through our prudent business model and sound practices.”

On his part, Pinak Maitra, KIPCO’s Group Chief Financial Officer said: “The success of this bond issuance reconfirms that global investors highly value regular engagement and transparency. The success of the transaction was evident in the tightening of the initial price guidance by a significant 35 basis points to the final issue price, reflecting the investors’ recognition of the company’s track record in a busy period of regional supply. One of KIPCO’s strengths is its management of liabilities, as seen in the $26 million reduction in annual cost of funding resulting from this bond issue, once we have repaid the July 2020 notes.”

The issue attracted 270 quality investors, including leading fixed income global institutions, insurance companies and pension funds. The distribution profile was well balanced, with European and UK investors allocated 24 percent and 23 percent of the transaction respectively, and MENA investors allocated 23 percent, while Asian investors accounted for 23 percent, and US offshore and other investors were allocated 8 percent. The notes are listed on the London Stock Exchange.

The joint lead managers on the transaction were Bank ABC of Bahrain, First Abu Dhabi Bank, HSBC, JPMorgan and KAMCO Investment Company. KIPCO launched its EMTN Program in 2006. This is the eight issuance under this flexible arrangement. Since inception, KIPCO has raised over $3.6 billion in US dollars and euros.

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