Saudi Banks Look At Sukuk Issuance to Increase Buffers

Four Saudi banks – Saudi Awwal Bank (SAB), Banque Saudi Fransi (BSF), Alinma Bank, and Arab National Bank (ANB) on Thursday informed Saudi Exchange (Tadawul) that they were looking to increase their buffers by tapping global and regional investors.

While Saudi Awwal Bank raised $1.25 billion through its offering of additional Tier 2 green US dollar-denominated bonds with a yield of 5.94% per annum. The issuance aims to enhance Tier 2 capital, for general bank purposes, and to meet its financial and strategic objectives, the bank said.

The offering, directed to qualified investors inside and outside Saudi Arabia, was managed by HSBC Bank PLC, Goldman Sachs International, Abu Dhabi Commercial Bank PJSC, Citigroup Global Markets Limited, DBS Bank Ltd., Emirates NBD PJSC, Mashreq Bank PJSC, Mizuho International PLC, and Société Générale.

Al-Awal explained that the bonds have a maturity period of 10 years and are redeemable halfway through the term. They will be listed on the London Stock Exchange’s International Financial Market and can be sold under Regulation S of the US Securities Act of 1933, as amended.

Alinma Bank

Alinma Bank raised $500 million through a perpetual additional capital sukuk issuance with an annual return of 6.25%, callable after 5.5 years for investors in Saudi Arabia as well as those in other countries.

The bank kicked off the offering of its USD-denominated sustainable AT1 capital notes and the issuance falls under the bank’s AT1 program. This comes a little over a month after Alinma closed a $500 million sukuk issuance.

The bank said in a statement on the Saudi Stock Exchange (Tadawul) that the issuance aims to enhance Tier 2 capital, for general bank purposes, and to achieve its financial and strategic objectives.

Alinma explained that the sukuk will be listed on the London Stock Exchange’s International Securities Market, and that the sukuk may only be sold in accordance with Regulation S of the U.S. Securities Act of 1933, as amended.

Banque Saudi Fransi

BSF closed $1 billion T2 issuance with a 5.761% annual return. The bond, which was open to both local and international investors and carried a 10-year maturity and a five-year call, falls under the bank’s medium-term note program.

Arab National Bank

Arab National Bank intends to issue perpetual additional Tier 1 capital sukuk denominated in dollars. The bank explained that the goal is to improve Tier 1 capital for the bank’s general banking purposes and to meet its financial and strategic objectives in accordance with the Sustainable Finance Framework.

The Bank said that the value and terms of the sukuk offering will be determined later based on market conditions, indicating that it is subject to the approval of the relevant regulatory authorities where applicable, and will be conducted in accordance with relevant rules and regulations.

The offering is expected to be conducted through a special purpose vehicle (SPV) and offered to qualified investors inside and outside Saudi Arabia.