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Tue 22 Jun 2010 11:10 PM

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Mumtalakat bonds may yield 300 points over midswaps

Bond sale from the Arabian Gulf state will be its first since March this year.

Mumtalakat bonds may yield 300 points over midswaps
BOND YIELD: Bahrains sovereign wealth fund, Mumtalakat Holding, may price its bonds to yield about 300 basis points above benchmark mid-swaps. (Getty Images)

Bahrain Mumtalakat Holding Co, the Arabian Gulf country’s sovereign wealth fund, may price its bonds to yield about 300 basis points above benchmark midswaps, three people familiar with the pricing range said.

The banker and two investors declined to be identified because terms of the deal aren’t set. The fund may sell $500 million of bonds maturing in five years as soon as this week in its first sale of debt overseas, a person familiar with the plan said last week.

Bahrain in March sold $1.25 billion bonds maturing in 2020 to yield 200 basis points more than similar maturity US Treasuries. A basis point is 0.01 percentage point. The yield has declined 11 basis points this month to 5.552 percent as of 4:50 p.m. in Dubai, according to Bloomberg bond trader composite prices.

The sale will be the first from Bahrain, the smallest oil producer among Gulf Arab states, since March. Issuers from the Middle East raised $10.7 billion from debt sales so far this year, according to data compiled by Bloomberg data. That compares to $16 billion in the same period last year.

Mumtalakat, established in July 2006, holds stakes in more than 35 companies and had assets of 3.4 billion dinars ($10 billion) as of Dec 31, according to its website.

Mumtalakat will have a long term rating of A at Standard & Poor’s, the sixth highest investment grade rankings, S&P said last week. The fund has about $1 billion of bank loans outstanding, according to data compiled by Bloomberg. (Reuters)

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