Российско-Иорданский Деловой Совет

Historic bond sale finalised – Abu Hammour

By Omar Obeidat

AMMAN – The government has completed the issuance of $750 million in five-year bonds on international markets, Minister of Finance Mohammad Abu Hammour announced Tuesday.

He told The Jordan Times that the bonds, sold to about 220 international investors, carried a fixed annual interest rate of 3.875 per cent, to be paid in six-month instalments.

“This is the first time in the Kingdom’s history that it has issued bonds on international markets,” the minister said, highlighting that the issuance was managed by a coalition of international banks including JP Morgan, Credit Suisse, HSBC and the Arab Bank.

Stating that over 15 financial institutions applied to manage the bond issuance, Abu Hammour said the four-bank consortium was selected after a specialised technical committee from the finance ministry and the Central Bank of Jordan (CBJ) studied the offers.

He indicated that the bond was oversubscribed fourfold, with demand exceeding $3.1 billion, a fact he said reflected international investors’ confidence in Jordanian government bonds and in the Kingdom’s credit rating.

“The bond issue will boost the government’s flexibility in securing financing for any future budget deficit as well as funds needed for infrastructure projects,” the official remarked, pointing out that the government is also considering issuing Islamic sukuk as an alternative to high-cost local borrowing.

The interest rates on the five-year bonds, which are “markedly” less than local borrowing, will save the treasury millions and reduce the public debt service burden on the state budget for the coming years, he stated.

According to Abu Hammour, the investors who bought the bonds were from Asia, the US, the UK, Europe and the Middle East, and included a number of the world’s major sovereign investment funds.

He attributed the success of the bond to a roadshow organised by the four banks that managed the issuance, during which a delegation from the ministry and the CBJ briefed international investors on the main points of the 2011 budget as well as on the government’s success at cutting spending while increasing revenues.

With international interest rates expected to increase, Abu Hammour said it was inevitable that the government would resort to foreign borrowing in order to obtain loans at better rates.

jordantimes

Russian-Arabic Business Council

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