Orders Top $1B For Bahrain Sovereign Wealth Fund Bond Debut

22nd Jun 2010 22:40

By Katy Burne Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Offers for Bahrain Mumtalakat Holding Co.'s first-ever bond issue are in the range of $1 billion to $1.25 billion, according to a source familiar with the sale. That means the sovereign wealth entity's debut could be larger than the minimum $500 million benchmark size when it completes on Wednesday. Deutsche Bank, HSBC, JPMorgan and Standard Chartered are leading the sale. The five-year senior unsecured bonds, rated A by Standard & Poor's and A from Fitch Ratings, are expected to yield 300 basis points over mid-swaps. Proceeds will be used for general corporate purposes, including to refinance existing debt. The Kingdom of Bahrain, which owns Mumtalakat outright, issued $1.25 billion in 5.5% bonds on March 24 via JPMorgan, Deutsche Bank and BNP Paribas, according to Dealogic. In a note on June 21, Standard & Poor's said there is an "almost certain likelihood that the government of Bahrain would provide timely and sufficient extraordinary support to Mumtalakat in the event of financial distress," although it does not formally guarantee its liabilities. Mumtalakat does not make material investment decisions without government consent, S&P added. Most of the company's assets are in domestic real-estate, telecommunications, aviation, banking and manufacturing. Bahrain owns a separate holding company for oil and gas assets, the National Oil and Gas Authority. The issuer's decision to tap the capital markets for the first time was predicated on the Mumtalakat's need to become more independent from Bahrain, said the source. "In the wake of the Dubai World issues, Bahrain is trying to push these sovereign entities away from its balance sheet and would like them to fund themselves on their own," the person said. -By Katy Burne, Dow Jones Newswires; 212-416-3084; [email protected] (END) Dow Jones Newswires June 22, 2010 17:40 ET (21:40 GMT)