BBK sets terms for $275m exchange offer
Dubai, November 23, 2011
Bank of Bahrain and Kuwait (BBK) in Bahrain unveiled terms on Wednesday for its planned $275 million debt swap which will see it exchange the bonds for new senior notes due in 2018, in a bid to improve its liquidity profile.
Under the exchange offer, BBK, which is 18 percent owned by the Kuwait Investment Authority, will exchange the subordinated bonds, which are due 2017, for the senior notes.
The new notes margin has been set at 1.75 per cent per year, and the coupon on the new bonds will be 1.75 percent over the 3-month dollar London interbank offered rate, it said in a statement.
Subordinated debt holders are typically junior in claim to other debt holders of a company. Exchanging existing notes into senior debt may appeal to current investors, and be a cheaper option for the borrower, because it is considered less risky.
The exchange ratio for the existing notes is 100 percent, the statement said. The offer is valid until November 29, with results to be disclosed on November 30.
'The purpose of the exchange offer is to improve the efficiency of the capital structure and optimise BBK's liquidity profile by refinancing the retired subordinated notes with senior unsecured funding,' the statement said.
Just over $152.4 million of the subordinated bonds due in 2017 is still outstanding, the lender said.
HSBC is acting as dealer manager. – Reuters