Kuwait's Dar closes 1st part of $400mn Islamic loan

FUNDING ISSUES: Kuwait's Investment Dar is seeking a total of $400mn in Islamic finance. (Getty Images)

Kuwait's Investment Dar, which owns half of British luxury car Aston Martin, said it had closed the first tranche of a 1.5 billion riyal ($400 million) Islamic syndication to refinance debt.

The three-year Murabaha deal was priced at 200 basis points over SAIBOR (Saudi Arabia Interbank Offered Rate), Investment Dar said in a statement on Tuesday, adding that Saudi Arabia's Al-Rajhi Bank and Oman's Bank Muscat were funding the first tranche worth 600 million riyals.

In a murabaha deal a financier buys a commodity and sells it to the customer at a higher price, complying with Islam's ban on interest.

The funds will be used mainly to refinance Dar's more costly and shorter-term loans, Executive Vice-President Amr Abou Al-Seoud told newswire Reuters.

"It will be for general use of Investment Dar... mainly towards replacing debt which is more expensive," he said.

Dar is expected to close a second tranche of the financing deal before year end, despite the current global credit crunch, he added.

"We expect by November or December but we target to close it before the end of the year," he said.

Investment Dar has been expanding abroad by buying stakes in companies around the Middle East and Europe and wants to boost its banking operations abroad.

It said last month it could launch Islamic banking units in London and Dubai by the end of this year. (Reuters)

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