The National Commercial Bank (NCB) has “successfully placed” its SR5 billion 10 non-call 5-year subordinated Tier II capital sukuk offering, marking “the largest issuance by a financial institution in Saudi Arabia and the “largest ever subordinated debt instrument” issued by a financial institution in the MENA region. The transaction represents NCB’s debut of local 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 SR4 billion, allowing the transaction to be upsized to SR5 billion 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 the Kingdom, NCB’s issuance was priced at 6-month SIBOR+110bps.
According to Mansour Al-Maiman, chairman of NCB, 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 Saudi Arabian Monetary Agency’s (SAMA) requirements and was approved by NCB’s Shariah committee.
The issuance proceeds will be used to further support NCB’s growth plans across the various business segments of the bank.