Al Rajhi Bank announces successful closing of the first US dollar sustainable sukuk

Waleed Almogbel CEO and Managing Director of Al Rajhi Bank

Al Rajhi Bank, the world’s largest Islamic bank in terms of both assets and market capitalization, successfully priced an inaugural $1 billion (SAR 3.75 billion) 5-year Sustainable Sukuk with a profit rate of 4.75% per annum on Wednesday March 29, 2023. The Sukuk represents Al Rajhi Bank’s first issuance in the US$ international capital markets following the successful close of the two SAR local issuances in 2022.

The orderbook for the Sukuk peaked over $3.75 billion, indicating significant momentum and interest from global and regional investors in Al Rajhi’s credit. This allowed the bank to tighten pricing from Initial Price Thoughts of UST+150bps to a landing price of UST+110bps with the 40bps move representing the largest price tightening for any GCC FI transaction since 2020.

The proceeds from the issuance will be used to enhance Al Rajhi Bank’s liquidity and support the bank’s business growth especially on the Green and Social which are aligned with the Net Zero and Vision 2030 targets set by the Kingdom of Saudi Arabia. Al Rajhi Bank had appointed S&P Global Ratings to assess its Sustainable Finance Framework and its alignment with global funding standards and issued a Second Party Opinion accordingly.

The joint lead managers and book runners on the issuance of the Sukuk were Al Rajhi Capital, Citi, Emirates NBD Capital, Goldman Sachs International, HSBC, J.P. Morgan, KFH Capital and Standard Chartered Bank.

Commenting on the successful issuance, Managing Director and CEO of Al Rajhi Bank, Mr. Waleed Almogbel stated, “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. We are proud to present the bank’s commitment to Sustainable financing as we look to diversify our funding strategy and are grateful for the support of our local and international investors as part of the large engagement we received during the marketing process for this Sukuk. We also look forward to publishing our annual Allocation and Impact report which will allow investors to further understand the environmental and social benefits this Sukuk transaction will create.”

The allocations for the Sukuk were geographically diversified, with 49% of investors located in the MENA region, 19% in Asia and 32% other International Investors.

Al Rajhi Bank’s successful Sukuk issuance confirms its position as the leading financial institution committed to providing innovative and Sharia-compliant banking solutions globally.