Alinma Bank is planning to issue USD-denominated additional tier one certificates as the lender looks to shore up its core or “tier 1” capital, it said in a disclosure to Tadawul. It hasn’t said how much it hopes to raise through the offering and said the transaction is still subject to regulatory clearance.

Bankers will offer the additional tier 1 certificates to both local and international investors, the disclosure said.

ADVISORS- Alinma hired Abu Dhabi Islamic Bank, Alinma Investment Company, Emirates NBD Bank, J.P. Morgan Securities, MUFG Securities, and Standard Chartered Bank as joint lead managers on the transaction.

Uh, Enterprise? What’s tier 1 capital? Broadly speaking, you can think of tier 1 capital as being the bank’s stock and retained earnings — it’s the most liquid capital and readily available to it if a lender needs more liquidity in a time of crisis. Tier 2 capital is less-liquid capital, including some kinds of term debt — it can be more difficult to mobilize when a bank needs it because of restrictions placed on it by borrowing covenants. The Basel accords set minimum requirements for both tiers to ensure banks can absorb losses and remain solvent, stipulating specific ratios of Tier 1 and total capital to risk-weighted assets

SOUND SMART- Additional tier one certificates (or just “AT1 certificates”) are a form of subordinated debt — they rank behind other types of bank debt in case of liquidation. That makes them riskier than senior debt, but still prioritizes them above equity holders.

IN OTHER DEBT NEWS-

Enma AlRawabi lined up SAR 170 mn in Shariah-compliant facilities from Arab National Bank with a five-year financing period, it said in a disclosure to Tadawul. The fresh funds will help the company buy real estate assets in Riyadh.

Tags: