Bahrain Raises Islamic Bond Size, Tightens Pricing

Bahrain, the smallest oil producer among the six Gulf Arab states, raised the size of its Islamic bond to $750 million and tightened the pricing on its five-year note complying with Islam’s ban on interest, Algebra Capital Ltd. said.

The bond may be priced to yield about 340 basis points above similar maturity U.S. Treasuries, Mohieddine Kronfol, managing director at Algebra in Dubai, said in an interview today. Algebra, which manages a fund that is dedicated to Islamic bonds, is investing in the issue.

The yield on Bahrain’s Islamic bonds, also known as sukuk, compares with five-year conventional bonds sold by Abu Dhabi in April that were priced to yield 400 basis points over Treasuries at the time of sale. A basis point is 0.01 percentage point. A banker familiar with the Bahraini deal said yesterday the bond may be priced to yield about 350 basis points