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Kuwait: In its capacity as the issuer, The Commercial Bank of Kuwait (Al-Tijari), and the Kuwait Financial Centre “Markaz”, the lead manager and subscription agent, announced in a joint statement the completion of the KWD 100 million subordinated Tier 2 capital bonds program after issuing the KWD 50 million second tranche bond with a tenure period of 10 years, callable after 5 years. This issuance was executed through a private placement to qualified investors, where the bonds were fully subscribed, reflecting the investors’ trust in the quality of the issuance, enhancing the position of the Commercial Bank of Kuwait, and highlighting the competence of the lead manager. This deal also marks the completion of the first bond program for the Commercial Bank of Kuwait.
The bonds of the second tranche of the program offer rewarding returns for holders, as they were issued at a floating interest rate of 3.0% above the discount rate set by the Central Bank of Kuwait, with the minimum annual interest rate standing at 5.0%, per annum, payable semi-annually. The Bank will use the proceeds from the bond issuance to increase their Tier 2 capital, enhancing the Bank’s capital adequacy ratio, in compliance with the Basel III framework. The proceeds will also support the Bank’s future expansion plans.
Moreover, the unsecured subordinated Tier 2 compliant bond issuance was rated BBB by Capital Intelligence, reflecting the Bank’s solid capital base, which enjoys a high first-tier capital ratio and a high total capital adequacy ratio. Other supporting factors include high quality assets and maintaining its non-performing loan ratio at zero for six consecutive years as of the end of 2023 and the first quarter of 2024, in addition to high rates of non-performing loan reserves. The Bank also boasts a strong profit rate with the highest average of return on assets compared to similar banks, in addition to a high liquidity rate and a strong financing base.
Commenting on this announcement, Commercial Bank of Kuwait’s CEO, Ms. Elham Mahfouz, said: “It gives us great pride to successfully complete the Bank's second tranche issuance, as well as the first bond program of its kind, denominated in Kuwaiti dinar. The bonds have received great traction from investors, given the excellent position the Bank enjoys in the Kuwaiti banking sector. Moreover, the strong demand that we have seen clearly demonstrates the market’s confidence in Kuwait’s banking sector in general, and in the Bank’s performance and its future strategic plans in specific, coupled with the efficiency of the lead manager and subscription agent. The success of the bond issuance will directly contribute to the enhancement of the Bank’s capital adequacy, while supporting future growth plans. The timely success of this deal is attributed to the clear operational framework of the Bank, supported by the professional expertise of the lead manager and subscription agent, and the positive and impactful interaction with the regulatory authorities, namely the Central Bank of Kuwait and the Capital Markets Authority.”
General Manager-Treasury and Investment Division at the Commercial Bank of Kuwait, Mr. Hussain Al Aryan, said: “As the second oldest established Kuwaiti bank, the success of this issuance further reinforces the Bank’s positioning, from a credit and credibility perspective. It is also a testament to the strong positioning of Kuwait’s capital market, as an attractive investment destination that offers high return opportunities for both issuers and investors alike. This collaborative partnership with the Kuwait Financial Centre “Markaz” resulted in the efficient completion of the bond issuance, playing a pivotal role in the overall success of the operation”.
Also commenting on the success of the operation, Markaz’s CEO, Mr. Ali H. Khalil, said: “We cherish the strong relationship we have with the Commercial Bank of Kuwait and we are pleased to have fulfilled our role as a lead manager and subscription agent, solidifying our expertise in the investment banking sector. The issuance witnessed strong demand from investors, driven by the stable performance and growth strategy pursued by the Commercial Bank of Kuwait, and its strong credit rating, in addition to our professional capabilities as the lead manager. We look forward to continuing supporting more local companies across various sectors with the issuance of bonds and sukuk, to achieve their business objectives.”
Ms. Rasha Othman, Executive Vice President, Investment Banking (Capital Markets) at Markaz, said: “The successful completion of the bond program issuance denominated in Kuwaiti dinar represents a significant addition to our track record, as Markaz played the key role in orchestrating the first convertible bonds into shares, denominated in the Kuwaiti dinar, as well as the first BOT- Backed bonds in Kuwait, and the first high-yield bonds, denominated in Kuwaiti dinar, in addition to the first Sukuk issuance for a Kuwaiti company. These milestones reflect the continuous innovation and the outstanding execution capabilities of Markaz’s investment banking team.”
About Kuwait Financial Centre “Markaz”
Established in 1974, Kuwait Financial Centre K.P.S.C “Markaz” is one of the leading asset management and investment banking institutions in the MENA region with total assets under management of over KD 1.30 billion as of 31 March 2024 (USD 4.24 billion). Markaz was listed on the Boursa Kuwait in 1997.
Over the years, Markaz has pioneered innovation through the creation of new investment channels. These channels enjoy unique characteristics and help Markaz widen investors’ horizons. Examples include Mumtaz (the first domestic mutual fund), MREF (the first real estate investment fund in Kuwait), and Forsa Financial Fund (the first options market maker in the GCC since 2005), all conceptualized, established, and managed by Markaz.
For further information, please contact:
Sondos S. Saad
Media & Communications Department
Kuwait Financial Centre K.P.S.C. "Markaz"
Email: ssaad@markaz.com