Al Rajhi closes another five-year sustainable sukuk issuance: Saudi Arabia’s Al Rajhi Bank closed another USD 1 bn issuance of USD-denominated tier 1 capital sustainable sukuk, according to a Tadawul filing published on Saturday. The issuance received more than USD 3.5 bn in orders, Reuters reported on Thursday, citing a document it has seen from one of the arranging banks.

Tier 1 bonds? The debt instruments act as a capital cushion for banks if their capital levels fall below a certain threshold. They are seen as the riskiest debt instruments that can be issued by lenders and therefore hold a higher coupon.

The details: The sukuks — which have no fixed maturity date — have a par value of USD 200k with a 6.37% yield — down from an initial guidance of 6.875%, according to the document reviewed by the newswire. The settlement of the issuance will conclude this Thursday, with Reuters reporting the allocation of the issuance took place last Thursday. The offering was made available to investors in Saudi Arabia and globally, who can redeem the bonds after five years. The sukuk will be listed on the London Stock Exchange's International Securities Market, the filing added.

Where are the funds going? Proceeds will be earmarked to support the bank’s financial and strategic objectives in line with its sustainable finance framework, it said in an earlier filing last week. The issuance is expected to be implemented through a special purpose vehicle established by the bank.

Advisors: Al Rajhi Bank hired our friends at HSBC, along with Al Rajhi Capital, Citigroup Global Markets, Dubai Islamic Bank, Emirates NBD Bank, Goldman Sachs International and Standard Chartered Bank as joint lead managers and bookrunners.

Al Rajhi is on a roll: Al Rajhi Bank closed USD 1 bn from its USD-denominated sustainable sukuk offering in March. It sold a total number of 5k bonds at a par value of USD 200k each at 90 bps over benchmark US Treasuries, with the order book reaching USD 2.8 bn.

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