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Our friends at Mashreq have started selling their benchmark-sized, USD-denominated additional tier 1 (AT1) bonds with initial pricing expected to be in the high 7% range, Reuters reported yesterday, citing an arranging document it saw. Mashreq plans to raise USD 500 mn from the issuance, which was expected to see the final price set later yesterday.
REMEMBER- Mashreq hired banks to advise on the issuance last week. The bonds will be perpetual and non-callable for 5.5 years, meaning Mashreq can’t redeem them during that period except by paying a penalty.
Uh, Enterprise, what are AT1 bonds? They’re a common way banks raise core tier-one capital without diluting shareholders by raising equity. Additional tier one certificates (or just “AT1 certificates”) are a form of subordinated debt — they rank behind other types of bank debt in case of liquidation. That makes them riskier than senior debt, but still prioritizes them above equity holders. AT1 certificates are “perpetual” in that they have no fixed maturity date. They pay interest in much the same way as a bond does, but usually can be converted into equity in some circumstances — that’s why they’re often called CoCos in the industry, for “contingent convertibles.”
ADVISORS- Mashreq has appointed Abu Dhabi Commercial Bank, Al Ahli Bank of Kuwait’s DIFC branch, BofA Securities, Citi, Emirates NBD Capital, FAB, Kamco Investment Company, Mashreq, and Mizuho as joint lead managers and joint bookrunners.
IN OTHER MASHREQ NEWS-
The bank also facilitated a BD 130 mn (USD 343 mn) dual currency real estate financing facility for Abu Dhabi-based Eagle Hills Diyar’s Marassi Al Bahrain project, according to a press release. The funds will be used to offer more residential offerings and leisure facilities at the development.
ADVISORS- Mashreq acted as the sole coordinator, bookrunner, investment manager, security agent, and account bank on the transaction. It also underwrote and arranged the facility along with Kuwait Finance House – Bahrain.
