Ras Al Khaimah-based lender Rakbank became the first Middle East bank to issue a social bond when it priced a US$600m five-year on Thursday.

Rakbank (Baa1/–/BBB+) does a significant amount of lending to small and medium-sized businesses and a social bond framework fits well with this part of the bank’s loan book, a banker close to the deal said.

Through the issuance of social bonds, Rakbank will fund projects related to healthcare and employment generation.

The spread was fixed at 135bp over Treasuries after leads started marketing at 170bp area. The lead saw fair value at around 130bp–135bp, using comparables including Doha Bank and Commercial Bank of Qatar.

Final orders for the trade topped US$1.5bn.

Founded in 1976, Rakbank is majority owned by the government of Ras Al Khaimah, one of the UAE’s seven emirates. The government holds a 53% stake in the lender.

Rakbank has not issued a US dollar benchmark since 2019 and, with that note having matured in April, has no bonds outstanding, according to LSEG data.

Although a relatively small bank in the context of the Middle East, one analyst said that it had a good growth outlook, pencilling in loan growth of around 9% in 2024.

In 2023, loan growth was around 10%. The business is skewed towards retail customers, who represent 48% of the loan book.

Abu Dhabi Commercial Bank, Bank ABC, Citigroup, Emirates NBD, First Abu Dhabi Bank, HSBC, ICBC, ING, JP Morgan and Standard Chartered led the deal.

Source: IFR