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Banque Libanaise pour le Commerce plans to raise $50m with bond issue

Banque Libanaise pour le Commerce plans to raise a minimum of $50 million in the bank’s first move toward the international bond market.

A senior financier said that Lebanon Invest, the securities firm in Beirut, is playing a leading part in marketing the three-year issue, expected to yield between 8 to 8.25 percent.

“They’re putting together a syndicate of banks,” said the financier. “Most of the subscribers are expected to be from Lebanon and the Gulf with some international presence.”

A BLC executive confirmed that his bank was preparing a bond issue without disclosing the purpose of the proceeds or giving further details.

The bond, if successful, will be the second private Lebanese issue to be launched into an emerging debt market which has become tougher since the Asian crises took hold of international finance toward the end of last year.

Banque de la Mediterranee launched a 5-year $75 million eurobond in October yielding 8.625 percent and representing a 420 basis point spread over US treasuries of similar maturity. A seven-year government bond in September yielded 8.75 percent ­ a spread of 390 basis points.

BLC’s 8-8.25 percent anticipated yield would put the spread at 336-361 basis points. Bankers said that such a premium was “pretty reasonable” and in the ballpark of the Mediterranee issue (taking into consideration the shorter maturity for BLC). However they did not expect the bond to be very liquid on the secondary market, similar to other Lebanese corporate debt.

BLC is undergoing an overhaul. Management has brought in PriceWaterhouseCoopers to advise on internal restructuring, and is investing in a new computer system costing between $4 million and $5 million

BLC made $16.2 million in net income last year. The share price rose from $11.25 at issue to $17.50 today, dropping from a $22.50 all-time high last year. The bank’s London GDR trades at around $18.00 today, up from $11.20 at debut and down from a $28 high last year.

Management promised to dispose of an estimated $25 million of repossessed real estate holdings when the bank went public in December 1996. Earlier this year, BLC agreed with Ark, a local financial group, to sell $7 million worth of property into a new fund.

 

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