Wednesday 15, March 2017 by Nabilah Annuar

Kuwait prices inaugural dual-tranche $8 billion bond offering

Kuwait bond oversubscribed with $29bn from 778 orders.

The State of Kuwait has successfully issued its inaugural dual-tranche $8 billion bond offering into the international debt markets. The bonds were significantly oversubscribed with 778 investor orders totalling over $29 billion, with strong demand from both international and regional accounts.

Notes due in 2022 (the five-year Bonds) and for the value of $3.5 billion and notes due in 2027 (the 10-year Bonds) for the value of $4.5 billion. The five-year bond was successfully priced on 13 March 2017 at a yield of 2.88 per cent, the 10-year bond with a yield of 3.62 per cent with a spread of 75bps on the five-year bonds and 100bps on the 10-year bonds respectively, over the relevant US Treasury securities.

Commenting on the issuance, HE Anas Alsaleh, Deputy Prime Minister & Minister of Finance of Kuwait said, “We are delighted with the successful pricing of this transaction and the positive response we have received from international investors. This highlights the State of Kuwait’s strong credit standing amongst its international peers.”

“The State of Kuwait has put in place the right policies to ensure that growth and diversification will be maintained in the economy. Furthermore, The State of Kuwait has successfully established large fiscal buffers as a direct result of its ability to efficiently manage oil wealth. This transaction will introduce further diversification to the State’s sources of funding, and establishes a liquid benchmark for Kuwait in the international debt markets.”

The success of Kuwait’s inaugural bond issuance came after a week-long roadshow that covered two continents and four cities including London, New York, Boston and Los Angeles. The Kuwait delegation, led by Anas Alsaleh, Deputy Prime Minister & Minister of Finance of Kuwait, met with over 100 investors and included senior members of the Kuwait Government.

The transaction was also successful in achieving a diversified mix in terms of investor type and geography. The final geographic allocation for the five-year Bonds was 4 per cent to Asian investors, 46 per cent to European and UK investors, 24 per cent to investors from the Americas and 26 per cent to investors from the Middle East and North Africa (MENA). The allocation for the 10-year Bonds was 4 per cent to Asian investors, 19 per cent to European and UK investors, 51 per cent to investors from the Americas and 26 per cent to investors from MENA.

The final investor types allocation for the five-year Bonds was 22 per cent to banks and private banks, 60 per cent to asset managers and 18 per cent to agencies, pensions and insurance. The final investor types allocation for the 10-year Bonds was 25 per cent to banks and private banks, 68 per cent to asset managers and seven per cent to agencies, pensions and insurance.

Citigroup, HSBC and J.P. Morgan acted as Global Coordinators for the transaction, and Citigroup, Deutsche Bank HSBC, J.P. Morgan, NBK Capital and Standard Chartered Bank acted as Joint Lead Managers and Joint Bookrunners.

 

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