KIPCO bond response to encourage Kuwait issuers - BNP

KIPCO BOND: KIPCO is majority-owned by Al Futtooh Holding Co, which has links to Kuwait's rulers, according to ratings agency Standard & Poor's.(Getty Images)

Strong demand for Kuwait Projects Co's (KIPCO) $500m bond this week will encourage more Kuwaiti issuers, and showed fixed-income investors were diversifying within the region, one of the arrangers said.

The bond, the first out of Kuwait in 2009 and the first international bond issued by a Gulf Arab private sector company this year, was seen as a significant indicator of investor appetite.

It attracted orders worth more than $3.3bn.

"The mere fact of the significant order book shows the strong appetite for KIPCO but also for Kuwait," Mark Waters, head of debt capital markets Middle East at BNP Paribas, told Reuters on Thursday.

KIPCO is majority-owned by Al Futtooh Holding Co, which has links to Kuwait's rulers, according to ratings agency Standard & Poor's.

"Investors certainly took comfort in the quasi-sovereign nature but we will be going further down the rating risk (in Kuwait)," Waters said.

"We've got a reasonably healthy pipeline for Kuwait," he said.

Gulf Arab issuance of conventional as well as Islamic bonds, or sukuk, in 2009 has remained well below 2008 levels and has been dominated by sovereign and quasi-sovereign issuers from Qatar and the United Arab Emirates' Abu Dhabi.

Waters said investors will now look to diversify within the region.

"Investors will focus on new territory other than Abu Dhabi and Qatar, and part of that will be Kuwait," he said.

Waters said in particular financial institutions in the Gulf Arab region were currently looking to come to the fixed-income debt market.

The KIPCO bond was arranged by BNP Paribas, Goldman Sachs and JP Morgan. (Reuters)

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