Kingdom of Bahrain Raises US$2bn through a Dual Tranche Conventional Bond/Sukuk Issuance in February 2024
The Kingdom of Bahrain, acting through the Ministry of Finance and National Economy, returned to the international debt market in February 2024 with a dual tranche offering comprising a US$1bn fixed rate senior unsecured conventional bond and an US$1 billion fixed rate senior unsecured Sukuk Ijara/Murabaha. Both tranches were issued under the US 144/A Reg S rules.
The conventional bond has a tenor of 12 years maturing on 12 February 2036 and was issued under the Kingdom’s Global Medium Term Note Programme. On the other hand, the Sukuk certificates, issued through the trustee CBB International Sukuk Programme Company WLL on behalf of the Obligor, the Government of Bahrain, have a tenor of 7 years maturing on 12 February 2031and were issued under the trustee’s Trust Certificates Issuance Programme. Both tranches were closed on 12 February 2024.
The conventional notes offering was priced at a fixed interest rate of 7.5% per annum while the Trust Certificates were priced at a fixed profit rate of 6% per annum payable semi-annually in arrears. The Sukuk trust asset pool comprises a 53.22% of tangible assets and 46.78% of Murabaha assets.
The Sukuk Tranche was jointly managed by J.P. Morgan Securities, National Bank of Bahrain, HSBC, Standard Chartered Bank, Arab Banking Corporation, Dubai Islamic Bank, Mashreq Bank, Citi, Emirates NBD, and First Abu Dhabi Bank, who also acted as bookrunners to the transaction. The Sukuk certificates have been assigned a ‘B+’ rating by both Fitch Ratings and S&P Global.
Bahrain is a pioneer of the contemporary Islamic finance movement. It was one of the first countries to issue regular domestic Sukuk Al Ijara (Leasing Sukuk) at the Central Bank of Bahrain with short-to-medium-term tenors to manage liquidity requirements of locally authorised Islamic banks and where such institutions can park their reserve requirements on a Sharia’a-compliant basis.
Bahrain completed a similar transaction in April 2023 comprising a US$1 billion conventional bond with a tenor of 12 years under its Global Medium Term Note Programme priced at a fixed interest rate of 7.75% per annum; and a US$1 billion Ijara/ Murabaha Sukuk under its Trust Certificates Issuance Programme with a tenor of 7 years priced at a fixed profit rate of 6.25% per annum payable semi-annually in arrears.
The Bahrain sovereign Sukuk and Bond certificates were admitted for listing and trading on the main market of the London Stock Exchange in February 2028.