The National Commercial Bank ‘NCB’ has successfully placed its SR5.0bn 10 Non-Call 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 ever 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 SR4.0bn, allowing the transaction to be upsized to SR5.0bn 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 of Saudi Arabia, NCB’s issuance was priced at 6-month SIBOR+110bps.
The orderbook exceeded SR8.4bn 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. NCB’s Chairman, Mr. Mansour Al Maiman, commented: “We are extremely pleased with the success of this issuance and would like to thank the investor community for their trust and confidence in the NCB franchise”.
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 Shari’ah committee.
The issuance proceeds will be used to further support NCB’s growth plans across the various business segments of the bank.