First Palestinian corporate bonds issued

Palestinian investment firm PADICO announced on Tuesday the Palestinian territories' first issue of corporate bonds, worth $70 million (49 million euros). At a press conference in Ramallah, PADICO said it was issuing 7,000 five-year bonds, which will be privately placed and neither traded nor listed on the Palestinian stock exchange. The investment company, which is publicly traded, focuses on investment in the Palestinian economy, and has interests in infrastructure, real estate and tourism projects. Chairman Munib Masri hailed the issue as a sign of the firm's "commitment to investing in Palestine and ... confidence in the local economy." "We are taking the long view on things and hope to raise money through our corporate bonds to finance additional long-term investments; that is our vision and that is our strategy for Palestine," he said in a statement. Masri acknowledged the "political risk" involved in investments in the Palestinian territories, but said the firm had maintained a "sustained track record of commercial achievements." In February, PADICO declared profits of $38.1 million for 2010, a 22 percent increase in overall revenue. Palestinian Prime Minister Salam Fayyad welcomed the bond issue, saying it showed the progress made by the Palestinian economy. "This is a happy and important occasion and a significant step towards further strengthening capacity and encouraging investment in Palestine," he said. Maher al-Masri, the chairman of the Palestine Capital Markets Authority, said he hoped the issue could encourage the Palestinian private sector to diversify its financing options, breaking its dependence on bank loans. "We are hopeful that other competent and solid companies in Palestine will follow suit and issue financial instruments that will augment the variety of financial intermediation tools in Palestine, and will also improve our credit standing as a financial market," he said. PADICO said each bond would be issued at a par value of $10,000 with a minimum subscription of 10 bonds per subscriber. The five-year bonds will carry an annual fixed interest rate of 5.0 percent for the first 30 months, and a variable annual interest of between 5.0 and 6.5 percent for the remaining 30 months.