Kuwait Projects Company completes its $538mn 6-year bond issue

By Arya M Nair, Official Reporter
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KIPCO issues 6year unsecured bond
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Kuwait Projects Company Holding (KIPCO), has completed its $538 million six-year senior unsecured bond issue.

This is the largest KD-denominated bond issue to date, reflecting the confidence of investors in KIPCO’s underlying credit strength.

The bonds, maturing in December 2028, were available in fixed and floating rate tranches, with the floating tranche attracting 67 percent of the allocation. The fixed-rate bond pays investors a coupon of 6.75 percent annually, while the floating rate pays investors a coupon rate of 3 percent annually over the declared Central Bank of Kuwait (CBK) discount rate. The joint lead managers of the transaction were Kamco Invest and Gulf Bank.

Sunny Bhatia_KIPCO issues 6-year bonds
Sunny Bhatia

“This issuance represents a landmark transaction, as it is the largest ever KD-denominated issuance to date. We are pleased to be active contributors to the Kuwaiti debt capital market and its development. The transaction reflects the continued success of our proactive liability management that aims at raising long-term financing, extending the tenor of our existing liabilities for a stronger capital structure, and aligning the liabilities profile with investment holding strategies.”

Mr. Bhatia added that “We would like to thank the Kuwait Capital Markets Authority, our investors and our joint lead managers, Kamco Invest and Gulf Bank, for their support.”

Recently, Fitch Ratings, a leading provider of credit ratings assigned KIPCO a long-term Issuer Default Rating (IDR) of ‘BB’ with a Stable Outlook, which included the improved asset value diversification and a substantial increase in gross asset value that came as a result of the successful completion of the merger with Qurain Petrochemical Industries, KIPCO’s active role in the operation of its portfolio companies, and uplift from maintaining a medium level of overall dividend diversification driven by strong sector diversification.

Related: Fitch assigns ‘BB’ rating for Kuwait’s KIPCO with Stable Outlook