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English news

12-Jan-2016

Burgan Bank picks arrangers for KWD100 million Tier-2 bond; CAR to increase to 17% post issuance

Burgan Bank has picked two arrangers for a potential KWD100 million (USD329.4 million) Tier-2 bond, for which marketing to investors could start as soon as this week, according to sources aware of the matter. Burgan has picked NBK and KIPCO Asset Management as the lead managers for the issue, two sources further stated.   Our comment: The KWD-denominated bond issue is in line with Burgan bank’s effort to improve its capital adequacy after Basel III capital adequacy became effective in Kuwait in December 2014. Burgan’s capital adequacy ratio (CAR) stood at 12.7% in September 2015, but it will increase to 15% following the disposal of its 51.9% stake in Jordan Kuwait Bank.  Following the issuance of the planned KWD100 million tier-2 bond, Burgan’s CAR will increase to 17%. This will be comfortably above the minimum regulatory CAR as per the Central Bank of Kuwait of 14% by the end of 2016 (including a 1% DSI buffer for Burgan). (Reuters, Elena Sanchez-Cabezudo) 

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