Alinma Bank completes issuance of $1B AT1 sukuk

Abdullah Ali Abdullah Al Khalifa, CEO of Alinma Bank

Alinma Bank announced completing the issuance of perpetual, dollar-denominated Additional Tier 1 (AT1) sukuk at a total value of $1 billion. The sukuk, callable after five years, mark the first AT1 issuance in 2024.

In a statement to Argaam, Alinma Bank said that subscription to these sukuk received strong turnout as the issuance was 4.5x oversubscribed, with notable interest from foreign investors. The order book was the highest in MENA’s financial sector in 2024, totaling $4.5 billion, which indicates the bank's strength in terms of capital adequacy (Tier 1) and comprehensive creditworthiness.

The statement clarified that the profit rate was reduced by 50 basis points to 6.500% during the book-building process in light of high demand. The profit rate is equivalent to the US Treasury (UST) issuance/readjustment margin + 220 basis points over UST. This represents one of the lowest spreads for a permanent US dollar-denominated issuance in the GCC over the past five years.

Regarding the issuance, Abdullah Ali Abdullah Al Khalifa, CEO of Alinma Bank, emphasized the significance of the deal for the bank, the Kingdom, and the entire region. He added, "This is Alinma Bank's first issuance in international markets. We are proud of this result. Furthermore, it is the first AT1 issuance from MENA in 2024, the first dollar-denominated AT1 issuance since February 2022 from Saudi Arabia. It is also MENA’s largest AT1 issuance in three years.

We are pleased with the growing demand for Shariah-compliant issuances among foreign investors and hope that this paves the way for more foreign demand in the Saudi market."

Key Highlights of the Issuance:

- The deal's value increased from the anticipated initial size of $750 million to the final value of $1 billion.

- An intelligent pricing strategy that initially set the rate at 7.000% and then reduced it by 50 basis points to 6.500%, to market one of the most significant cautious pricing movements in several years.

- High demand and strong investor participation, with the order book reaching its peak at over $4.5 billion, representing an oversubscription rate of 4.5x.