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Riyad Bank closed its USD 750 mn additional tier 1 capital USD-denominated sustainable sukuk issuance, with settlement scheduled for Thursday, 3 October, according to a disclosure to Tadawul. Proceeds will be directed toward shoring up the bank’s tier 1 capital and supporting general banking activities, while the sukuk will be tradable on the London Stock Exchange’s International Securities Market.
The details: The notes carry a 5.5% annual return and are callable after five years. The bank issued 3.75 sukuk at USD 200k each.
IN CONTEXT- The issuance comes as part of the bank’s international additional tier 1 capital sukuk program that was established earlier this month after being approved by the bank’s board in August. Additional tier 1 (AT1) capital is a component of tier 1 capital that is held by banks to shore up their financial resilience. AT1 instruments can usually be converted into equity when a trigger occurs, such as when a bank’s capital falls below a certain threshold.
ADVISORS- HSBC, Kamco Investment, Merrill Lynch, Mizuho, Morgan Stanley, Riyad Capital, SMBC Nikko Capital Markets, Standard Chartered, and Warba Bank served as joint lead managers and bookrunners on the offer.
REMEMBER- Saudi Arabia led sustainable sukuk issuances in the GCC during 1H 2024, accounting for 42% of the region’s issuances. Al Rajhi Bank kicked off a USD 1 bn AT1 sustainable sukuk issuance in May, while Saudi National Bank sold USD 4.1 bn of five-year, USD-denominated sustainable sukuk in February.
