Palestinian investment firm Padico announced the first corporate bond issue in the Palestinian Authority this week. The bonds are valued at $70 million.

At a press conference in Ramallah on Tuesday, 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 in Nablus.

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 a “sustained track record of commercial achievements.”

Padico plans to establish several mega-projects in the coming period, such as a power generation project in the northern West Bank at a cost of $300 million, and a large-scale tourism and real estate development project in Jericho.

In February, Padico announced profits of $38.1 million for 2010, and a 22% increase in overall revenue.

Palestinian Prime Minister Salam Fayyad welcomed the bond issue, saying it showed the progress made by the Palestinian economy. . 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,” 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 bonds are senior debt secured by specific assets. The five-year bonds will carry an annual fixed interest rate of 5.0% for the first 30 months, and a variable annual interest of between 5% and 6.5% for the remaining 30 months.