Wednesday 9 February, Riyadh, Kingdom of Saudi Arabia Riyad Bank, rated A2/BBB+/BBB+ by Moody’s/S&P/Fitch, successfully closed a $750mn Additional Tier 1 sustainability Sukuk, making it the first sustainable AT1 Sukuk globally. The profit rate of 4% per annum is equivalent to the lowest credit spread ever achieved by a GCC bank for an AT1 Sukuk. The success of this transaction came on the back of an extensive marketing strategy aimed at updating international and regional investors with Riyad Bank’s financial performance. The management team held calls with institutional investors from Europe, Asia and the Middle East. Investors took comfort from the Bank’s strong credit fundamentals and management’s track record in delivering on its strategy despite challenging market conditions. The orderbook was 4.3 times oversubscribed with demand peaking at $3.2bn, most of which was allocated to banks and fund managers.
Mr. Tareq Al Sadhan, the Chief Executive Officer of Riyad Bank, commented “we are very pleased with the success of this transaction, which affirms the confidence placed by investors in the Bank’s strategic direction, board and management team. We are also proud to be issuing the first AT1 Sukuk globally in sustainable format, which reflects the Bank’s commitment to ESG and will positively contribute to the achievement of the Kingdom’s Vision 2030 and its goal to achieve Net Zero by 2060. This transaction is another testament of the strong economy and policy of the Kingdom of Saudi Arabia.”
To structure this transaction as a sustainabilty Additional Tier 1 Sukuk, Riyad Bank has published its debut Sustainable Finance Framework in line with the International Capital Market Association’s green, social and sustainability principles. The framework covers a diverse range of eligible sustainable activities which are linked to Riyad Bank’s ambition to become a regional ESG leader as it looks to drive green and social development in the Kingdom in line with Vision 2030 and Riyad Bank’s own flagship sustainable finance programme, namely its Bukra initiative. The Framework is aligned to the global best practice and received a Second Party Opinion from S&P Global Ratings which confirmed that it was aligned with all the sustainable finance principles. S&P awarded Riyad Bank with a Strong scoring for its Use of Proceeds section, noting positively the link of each category towards the Bank’s wider sustainability agenda.
Riyad Bank appointed Riyad Capital, HSBC and Standard Chartered Bank as Joint Global Coordinators and HSBC and Standard Chartered Bank as Joint Sustainability Structuring Agents and, together with BofA Securities, as Joint Lead Managers & Bookrunners.