Transaction oversubscribed 9 times with USD 4.5 billion demand from 200 investors 

July 2, 2014

Al Hilal Bank has successfully priced USD 500 million Perpetual Additional Tier 1 sukuk certificates, marking the first Tier 1 issuance out of the Middle East since May 2013. The transaction, which was 9 times oversubscribed, drew demand worth USD 4.5 billion from over 200 investors.

The offering follows Al Hilal Bank’s inaugural senior sukuk offering in October 2013 and has been structured to increase the probability of compliance with Basel III, the voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity risk. True to its record-setting standard, Al Hilal is the first bank from the MENA region to issue an Additional Tier 1 offering which includes a contingent Point of Non-Viability (PONV) clause.

The issuance was priced at par with a profit rate of 5.500 per cent, which represents the lowest coupon ever achieved by any bank for a USD Tier 1 issuance outside of the United States since 2008. Joint lead managers for the issue included Al Hilal Bank, Abu Dhabi Islamic Bank, Al Rayan Investment, Citigroup, Emirates NBD Capital, HSBC, Sharjah Islamic Bank (SIB), National Bank of Abu Dhabi (NBAD), and Standard Chartered Bank.

The issuance has a diverse geographical distribution, with the MENA region comprising (40 per cent), Asia (31 per cent), and Europe (29 per cent). Investor types involved in the transaction included Funds (32 per cent); Private Banks (31 per cent); Banks (29 per cent); and Insurance (8 per cent).

H.E. Ahmed Ateeq Al Mazrouei, Chairman, Al Hilal Bank, said: “We are very pleased with the exceptional investor response to Al Hilal Bank's second issuance in the debt capital markets and first capital-eligible offering. The strong investor interest resulted in the transaction achieving a USD 4.5 billion orderbook representing more than 9 times the offered amount. The transaction is further testimony to the confidence that international investors continue to have in the strength of Al Hilal Bank’s credit.”

“The response from the investor community has been very encouraging and serves as a testament to Al Hilal Bank’s credit fundamentals. We are pleased that the orderbook achieved a highly diversified set of investors, allowing us to achieve a balanced allocation both across geographies and investor types. This successful transaction has assisted Al Hilal Bank in strengthening its capital base further in order to accommodate future growth opportunities,” added Mohamed Jamil Berro, CEO, Al Hilal Bank.

In 2013 Al Hilal Bank received the highest credit ratings ever to be awarded to an Islamic Bank in the UAE: an A1 rating by Moody’s Investors Service and an A+ rating by Fitch Ratings. The progressive Islamic bank manages the Al Hilal GCC Equity Fund and Al Hilal Global Sukuk Fund and recently launched its Global Balanced Fund.

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