Issuer: Saudi Awwal Bank
Size: SR4 billion
Structure: Sukuk
Tenor: Perpetual
Bank: HSBC (sole arranger, dealer, sole lead manager, sole bookrunner)
Date: October 2023
Last year witnessed a steep slump in local-currency additional tier-1 activity in Saudi Arabia. According to Fitch, issuance fell to SR4.5 billion ($1.2 billion) in 2023 after a record SR15.6 billion in 2022.
The lion’s share of last year's issuance is accounted for by Saudi Awwal Bank’s dual-tranche benchmark deal last October.
The SR4 billion deal was SAB’s debut in the AT1 market and incorporated an unusual structure. Both fixed- and floating-rate tranches were announced at the outset to stimulate demand for the new sukuk programme.
The lion’s share of last year's issuance is accounted for by Saudi Awwal Bank’s dual-tranche benchmark deal
The strategy worked, and with the floating-rate tranche attracting healthy interest, the fixed-rate tranche was eventually cancelled ahead of closing.
The deal priced in October, in the wake of the escalation in tensions in the Middle East.
The first floating-rate AT1 sukuk to be distributed widely in the Saudi market, it was priced at 125 basis points over the Saudi Arabian Interbank Offered Rate (Saibor), tightening from an initial 140bp.
HSBC