DUBAI, (Reuters) – A unit of General Electric is expected to close the order books on Thursday on a 5-year fixed-rate dollar denominated sukuk, or Islamic bond, as the U.S. conglomerate looks to diversify its investor base, bankers said.

Unofficial price guidance for General Electric Capital Corp (GECC)’s Reg S sukuk is between 165 basis points (bps) and 175 bps over U.S. Treasuries, and the issue could be worth as much as $1 billion, depending on demand, bankers close to the transaction said.

The global Islamic bond market has been lying idle for much of 2009, after issuance was hit last year by the global credit crunch and a debate over the compliance of some of its structures with Islamic law.

Several sovereigns, including Gulf Arab state Bahrain and Indonesia, have issued sukuk in recent months.

Issuance fell 56 percent to $14.9 billion in 2008, according to Standard & Poor’s, but interest for high-rated emerging market debt has seen a flurry of conventional and Islamic bond issues in the third quarter of the year.

Bankers say GE Capital, the financial services arm of General Electric, aims to diversify its investor base to incorporate Islamic investors.

“GE is one of the most prolific issuers in the U.S. and all they are trying to do is tap a different investor base,” said one banker, who declined to be identified as the transaction is ongoing.

“Its always good to have a new market, and a diversified investor base,” another banker said.

GE Capital’s sukuk will be issued through GE Capital Sukuk Ltd, a subsidiary of GE Capital, in an Ijara structure.

Ijara — Arabic for leasing — incorporates an agreement in which banks lease an asset to a client for a specific time at a specific price. At the end of the leasing period, the client may or may not own the asset.

A series of roadshows taking in Asia and the Middle East were held recently to gauge demand from investors for the GE Capital bond.

Goldman Sachs, Citi, Kuwait’s Liquidity House – a subsidiary of Islamic lender Kuwait Finance House – and National Bank of Abu Dhabi are joint bookrunners for the sukuk issue.

Bank Islam Brunei Darussalam is joint lead manager, according to a banker.

Abu Dhabi government-owned investment company Mubadala said on November 9 its commercial finance joint venture with General Electric was aiming for at least $4 billion in business next year.