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MENAFN - Khaleej Times - 25/01/2014
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(MENAFN - Khaleej Times) Kuwait Projects Co, with interests from banks to real estate, started investor meetings and may raise as much as 500 million from the sale, the company said on Wednesday. The yield on the October 2016 bond of Kipco, as the company is known, tumbled 152 basis points since last year's high in June to 3.3 per cent on Thursday

Kipco, whose biggest shareholder is controlled by the Al Sabah ruling family, stands to benefit from the 110 billion in planned spending for projects including a power station and an oil refinery. It would be the first dollar bond from a Kuwaiti company since 2012, according to data compiled by Bloomberg

It's "a good time to issue as the rates have eased," and because the Fed may announce more monetary tapering at its meeting next week, Montasser Khelifi, a Dubai-based senior manager for global markets at Quantum Investment Bank Ltd., said in e-mailed comments. "It's also interesting for investors to see an issue from Kuwait as we haven't seen one for a long time.

Cutting cost

Bond sales in the six-nation Gulf Cooperation Council, which includes Saudi Arabia, fell 4.1 per cent in 2013 to 41.1 billion as issuers held off after Treasury yields rose. Societe Generale SA expects sales to rebound this year as several issues are revived

Kipco last sold dollar bonds in July 2010, raising 500 million from 10-year securities at a coupon of 9.375 per cent. The bonds were trading at a yield of 5.47 per cent

"I don't think they would need to pay more than 4.5 per cent" at current rates on a five-year bond, Amol Shitole, a credit analyst at SJS Markets Ltd. in Bangalore, India, said by phone

Kipco will sell the debt under its euro medium-term note programme if market conditions permit, a person familiar with the deal said January 21. The company hired BNP Paribas SA, HSBC Holdings Plc and JPMorgan Chase & Co to arrange investor meetings in Asia, the Middle East and Europe, said the person, who asked not to be identified because details are private

Yields declin

The Fed said in December it will cut monthly bond buying by 10 billion in January to 75 billion amid signs of an economic recovery

While it will probably keep trimming the purchases by the same amount at each Federal Open Market Committee meeting, economists forecast in a Bloomberg survey January 10, the yield on benchmark US 10-year notes has declined 18 basis points, or 0.18 of a percentage point, this month to 2.85 per cent

Kipco may use the proceeds from the sale for acquisitions, a capital increase at its Turkish unit or for refinancing its bond that comes due in 2016, Olga Budovnits, a Zurich-based emerging-market credit analyst at Union Bancaire Privee, said by e-mail on January 21


Khaleej Times

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