Al Rajhi Bank issued its inaugural US$1 billion sustainable Sukuk on the 5th April, representing the Saudi bank’s first international capital market and first sustainable Sukuk offering.
The orderbook for the five-year facility peaked at over US$3.75 billion, tightening the pricing from its initial price thoughts of US treasuries (UST) +150bps to a landing price of UST+110bps. According to the bank, the 40bps pricing move represents the largest price tightening for a GCC financial institution transaction since 2020.
“The success of this debut Sukuk issuance in these turbulent times reflects the confidence of investors in Al Rajhi Bank and the Kingdom’s solid foundations,” Waleed Almogbel, CEO and managing director of Al Rajhi Bank, commented.
The proceeds from the issuance will finance general corporate purposes to support the bank’s liquidity and its green and social growth in line with its Sustainable Finance Framework issued in Q1 2022.
“In line with the King Salman Renewable Energy Initiative, Al Rajhi Bank wants to maintain its position as a key participant in financing renewable energy projects in the country to aid in expanding renewable energy generation capacity…,” S&P Global Ratings noted in its second party opinion of the framework.
The facility was listed on the London Stock Exchange following its pricing exercise which closed on the 30th March 2023.
With the oversubscription of the bank’s debut sustainable Sukuk, a spokesperson from KFH Capital, one of the facility’s joint lead managers, told ISFI that Al Rajhi Bank will likely pursue further sustainable Sukuk issuances in the future.
Non-Saudi GCC investors represented the largest share of investors for the facility, representing 41% of total investors. By investor type, banks and private banks represented the vast majority of investors for the Sukuk at 59%.
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Al Rajhi Bank Debut Sustainable Dollar Sukuk US$1 billion  5th April 2023 |
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| Summary of terms and conditions | |
|
Issuer |
Al Rajhi Sukuk |
|
Obligor |
Al Rajhi Banking and Investment Corporation |
|
Size of issue |
US$1 billion |
|
Purpose |
General corporate purposes |
|
Tenor |
Five years |
|
Issuance price |
99.89% |
|
Profit rate |
4.75% |
|
Payment |
Semi-annual |
|
Currency |
US dollar |
|
Maturity date |
5th April 2028 |
|
Lead manager(s) |
Al Rajhi Capital, Citi, Emirates NBD Capital, Goldman Sachs International, HSBC Bank, JPMorgan, KFH Capital and Standard Chartered Bank |
|
Principal advisor(s) |
Citibank |
|
Governing law |
English law |
|
Legal advisor(s)/council |
Maples and Calder (Dubai), Allen & Overy, Khoshaim & Associates, White & Case (Dubai), the Law Office of Megren M Al-Shaalan in cooperation with White & Case and White & Case (Dubai) |
|
Islamic structure |
Wakalah, Murabahah |
|
Listing |
London Stock Exchange |
|
Rating |
‘A1’ by Moody’s investors Service, ‘A-’ by Fitch Ratings |
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Tradability |
Tradable |
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Face value/minimum investment |
US$200,000 |
|
Investor breakdown |
By geography: GCC (ex Saudi Arabia) 41%, Asia Pacific 19%, supranationals 19%, Saudi Arabia 8%, continental Europe 6%, UK 6%, US offshore 1%. By type: Banks/private banks 59%, asset managers/institutions 20%, others 20%, hedge funds 1% |