Al-Argan International Real Estate Company issues KD 26.5 million bond


Al-Argan International Real Estate Company. Kuwait Projects Company (KIPCO) Asset Management Company (KAMCO), Burgan Bank and Kuwait Financial Center (Markaz) have announced the issuance of 26.5 million Kuwaiti dinar bonds for Al-Argan. The timing of the issuance of the Al Argan bonds is to be considered highly opportunistic as it comes on the heels of the recovery of the local real estate companies' bonds market, which has not had a bond issuance since June 2010. Furthermore, the bonds have been rated 'BBB' by the ratings agency 'Capital Intelligence'. The maturity period for these bonds is five years and is issued in two tranches; the first tranche is worth KD 23.2 million with a fixed interest rate of 6.25 percent annually. The second Tranche is worth KD 3.3 million with a floating interest rate of 3.50 percent annually above the Central Bank of Kuwait discount rate, which currently stands at 2.50 percent, and is capped at 7.00 percent.

The Company's Chairman and Managing Director, Mr. Khalid Khudair Al-Mashaan, told Al-Watan Daily, "Today is available as tools for borrowing in Kuwait for short term but aims at medium financing. The best way to do that is to issue bonds, wherein we are able to achieve an investment grade and eventually went to public for such bonds. It gives us the competitive rate as compared to banks and such is a good thing that we achieve as recognition that reflects transparency of our company and trust on our investors. What you see here now is a complete development and we want to take it bigger, the four and five stars, which are the biggest ones in Kuwait. The expansion in Saudi Arabia, Oman and Bahrain is important relatively for us to reinforce with new subjects and also focus on our niche."

As for the Executive Vice President and Head of Financial Services and Investment Division of KAMCO Faisal M. Sarkhou said, "The client has evolved as company and we look at the equity and debt sides. Equity side to become listed and debt sides the bond issues for a company and proper structures to having loans with the banks are milestone.

Furthermore, CEO and Managing Director of KAMCO, Sadoun Abdullah Ali, commented, "We are very proud to have taken part and lent our assistance and expertise to such a project, and believe that the bond market will bring forth significant returns to all investors. We at KAMCO have a firm interest in the development and support of the issuance of bonds and Sukuks to diversify debt restructuring instruments to local businesses. This in turn will help stabilize the economic and real estate state-of-being in the Kuwaiti capital market."

From Markaz's side, CO Manaf Al-Hajeri added, "The synergy between Markaz, Al- Argan, KAMCO, and Burgan has resulted in the issuance of bonds at a crucial time. We are pleased to have contributed to their launch. Indeed, we place great emphasis on the development of the local bond market, whether it is through primary issuance restructuring or via the secondary market. To this effect, we regularly publish research reports on all aspects of the bond market, we aim to support all institutions in Kuwait with frozen bonds in order to encourage local issuances."

To conclude, Burgan Bank's Senior General Manager, Investment Banking and Treasury, May Al-Mudhaf, added, "Over the last period, we have provided financial assistance to successful companies such as Al Argan. In fact, the issuance of these bonds encourages companies with solid financial position to issue bonds, Sukuks, and even bank loans to offer companies the solvency they need."