Bahrain-based Durrat Sukuk Company on Saturday said it will issue this month a $120-million Islamic Sukuk bond due in 2009 to help finance a $1 billion residential and tourist resort in the Gulf Arab country.
The total amount can be increased to $200 million in the event of over-subscription, said the promoter, Kuwait-based Islamic bank Kuwait Finance House (KFH), which is partially underwriting the variable Islamic Istisna'a Ijarah-based Sukuk bond.
The funds will partially finance the residential and leisure project known as "Durrat al Bahrain". The project company, Durrat Khaleej al-Bahrain is equally owned by Bahrain's government and the Bahrain subsidiary of Kuwait Finance House.
The return on the issue has yet to be decided, said Ahmad al-Abbas, the executive president of Liquidity Management Centre (LMC), which is the mandated arranger and placement agent for the issue.
"Once we reclaim land and the infrastructure is built, we can pay off a portion of the Sukuk plans annual redemption," Abbas told a news conference in Kuwait City.
Islamic bonds pay no direct interest, considered usury by Muslims. They instead make regular payments based on profits from approved investments.
The issue was approved by LMC's and KFH's Islamic sharia boards as well as the International Islamic Financial Market.
Each Sukuk certificate will be issued in minimum denominations of $10,000 and the minimum investment is $500,000 per investor.
The issue will be listed on the Bahrain Stock Exchange.
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