15/09/2024
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15/09/2024
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KUWAIT CITY, Sept 15: Al Ahli Bank of Kuwait K.S.C.P. (ABK) has successfully priced a US$300 million Additional Tier 1 (AT1) bond offering with a coupon rate of 6.5% per annum. This marks the Bank's return to the debt capital markets since its last issuance in 2018 and showcases a significant achievement with notable price tightening for an AT1 issuance. It highlights ABK’s strong market position and the confidence investors have in its financial stability.
Initially, ABK opened the order books with initial price thoughts (IPTs) in the low 7% area and for a transaction sized at US$300 million. The substantial and robust demand from both international and regional investors enabled the Bank to set the final coupon rate at 6.5%. Despite strong interest, the order book remained resilient with minimal adjustments from investors. The Perpetual Non-Callable 5.5-year AT1 bond was priced with a reset margin of +292.2 basis points.
J.P. Morgan Securities plc acted as the Global Coordinator, while Abu Dhabi Commercial Bank, Citi, Emirates NBD Capital, HSBC, Kamco Invest, Mashreqbank, and SMBC Nikko acted as Joint Lead Managers and Bookrunners for this issuance.
The transaction garnered overwhelming interest, with the order book peaking at over US$1.4 billion, resulting in an oversubscription of over 4.5 times. The allocation breakdown showed that 68.0% was in the Middle East, followed by Europe (including the UK) at 26.0%. Notably, real money investors, including private banks and high-quality asset managers, accounted for 94% of the issuance.
On this occasion, Abdulla Al Sumait, Acting Group Chief Executive Officer at ABK, said, "The strong demand for subscription to the bonds reflects the confidence and reputation we have among investors at both regional and international levels. It confirms the success of our plans to address local, regional, and global economic challenges, as well as our commitment to providing the best returns for our shareholders and all our stakeholders."
Al Sumait added that the issuance marks ABK’s return to international capital markets for the first time since 2018, reaffirming its commitment to seizing the best opportunities to enhance its financial position, provide exceptional investment opportunities, and support the Bank's growth strategy at various levels.
He indicated that the issuance will contribute to strengthening the capital adequacy of ABK and will provide additional liquidity for the long term to support its expansion investment plans, alongside its ongoing commitment to regulatory and international requirements set by Basel III.
He noted that the Bank will use the proceeds from the issuance to develop its products and services for clients, as well as continue investing in its digital transformation plan across all its divisions and operations, keeping up with the continuous developments in the banking industry. This will aid in enhancing its financial position in all markets where it operates in Kuwait, the United Arab Emirates, and Egypt.
Al Sumait concluded that the strong demand for participation in the issuance serves as confirmation of the financial strength of the ABK Group and the confidence in its credit history. It also demonstrates investors' trust in the economic environment of Kuwait and its banking sector.
