Bahrain Bourse (BHB) announced today Sunday 11th January 2015 that following the invitation announced by the Central Bank of Bahrain (CBB), investors can directly subscribe in the primary market in the Government Islamic Lease Securities (Sukuk) that has been issued by the CBB on behalf of the Government of Bahrain through registered brokers at Bahrain Bourse. Thereafter the investors will be able to trade in the secondary market at BHB. The listing of the issuance is expected to take place on the 25th of January 2015.
The Bourse have determined that the subscription period through the registered brokers is effective Sunday 11th of January 2015 until Wednesday 14th of January 2015.
Islamic lease securities (Ijara Sukuk) are instruments representing assets owned by the Government of Bahrain (Land in Zallaq). The securities are issued by the Central Bank of Bahrain on behalf of the Government of Bahrain for the purpose of creating new opportunities for the investment of surplus financial resources in the economy and to provide a method of financing the expenditure and needs of various development projects. In issuing these lease securities, the Government of Bahrain sells an asset to the investors who will buy and own it before renting back to the Government at a predetermined rental rate, via a rental contract. The Government will also issue a binding promise to buy back the asset at its par value at the end of the rental period.
The BD100 million securities issued at a par value of BD1 each on 19th January 2015 for a period of 10 years ending on 19th January 2025. The returns (rent) on these securities will be paid every six months on 19th January and 19th July every year throughout the period of this issue. The annual rate of return will be 5.50%.
The returns (rent) on these securities will be paid every six months on 19th January and 19th July every year throughout the period of this issue. The annual rate of return shall be 5.50%.
The Government of Bahrain directly guarantees the Islamic lease securities via its binding promise to buy the asset at its original (par) value at maturity. It also guarantees to continue renting the asset according to the rental contract until the end of the rental period.
Bahrain Bourse have decided to exempt the charges related to account opening for the purpose of purchasing of government Sukuk issued by CBB during January of 2015.
It is worth to mention that one of the main advantages of subscribing through Bahrain Bourse is the ability to own sukuk directly (beneficiary ownership). Moreover, to encourage retail investors, the Bourse determined a minimum subscription of 500 BHD (500 sukuk). BHB has also determined a minimum allotment of 10,000 sukuk per subscriber applying for an amount of BHD 10,000 and above, while the remaining quantity will be allocated on pro rata bases.
Upon listing of the sukuk, investors will be able to trade them in the secondary market through a registered broker at BHB during the trading session which is held on daily bases from Sunday to Thursday from 9:30 A.M until 1 P.M.
The applicable commission of subscribing and trading of sukuk is set to 0.0008 (0.08%) of each transaction, however the commission will remain negotiable between the broker and the investor.