Saturday, Feb 22, 2014
Dubai: The National Commercial Bank (NCB) has successfully placed its 5 billion Saudi riyal (Dh4.89 billion) 5-year subordinated Tier II capital sukuk offering, marking the largest issuance by a financial institution in the Kingdom of Saudi Arabia and the largest subordinated debt instrument issued by a financial institution in the Mena region.
The transaction represents NCB’s debut local Saudi Riyal issuance and its inaugural Tier II capital offering.
Overwhelming interest from the investor community generated a 2.1x oversubscribed orderbook exceeding the initial target issuance size of 4 billion riyals, allowing the transaction to be upsized to 5 billion riyals without impacting the final pricing of the sukuk.
Setting the lowest funding level ever achieved for a Basel III compliant Tier II capital transaction in Saudi Arabia, NCB’s issuance was priced at 6-month SIBOR+110bps.
Key investor segments
The orderbook exceeded 8.4 billion riyals from 26 investors, representing the largest accumulated commitment for a Tier II capital transaction within the Kingdom of Saudi Arabia. Key investor segments participated in the book-building process, ranging from government-owned funds to banks, fund managers, corporates and insurance companies, which underpinned the book’s diversification and investor mix.
HSBC Saudi Arabia acted as a lead coordinator and GIB Capital, HSBC Saudi Arabia, JP Morgan Saudi Arabia and NCB Capital acted as joint lead managers and joint bookrunners. The structure of the sukuk was fully compliant with Basel III guidelines as per SAMA’s requirements and was approved by NCB’s Sharia committee. The issuance proceeds will be used to further support NCB’s growth plans across the various business segments of the bank.
Staff Report
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