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It’s been a busy week for the Kingdom (and GCC) in the international debt markets, continuing the trend as the largest emerging market issuer of debt so far this year — and in 2024 — with new USD denominated issuances from the PIF and Banque Saudi Fransi.
#1- The Public Investment Fund (PIF) closed its USD 1.25 bn sukuk issuance, after the seven-year USD-denominated offering was more than 6.5x oversubscribed, receiving over USD 9 bn in orders, it said in a statement. The sukuk will be listed on the London Stock Exchange’s International Securities Market, as part of PIF’s international sukuk issuance program.
The fresh proceeds will be allocated to general corporate purposes, the Aa3 Moody’s-rated institution stated.
We knew this was coming: The PIF earlier reported its plan to issue USD 1.5-2 bn in sukuk within weeks, as the Kingdom looks to fill budget gaps caused by falling oil prices. The PIF had raised some USD 11 bn at that time.
#2- Banque Saudi Fransi secured a USD 650 mn short-term unsecured debt as part of its capital note program, it said in a filing to Tadawul on Thursday. BSF announced its intention to offer additional tier-1 (AT1) bonds last week, opening the process to local and international investors.
The details: The lender sold 3.25k USD-denominated bonds at USD 200k each, with an annual yield of 6.4%. Although the notes do not come with a specific maturity date, investors wishing to cashout may do so after six years.
SOUND SMART- AT1s are high-risk bonds banks use to shore up their capital. They pay interest but can skip payments, and if the bank runs into trouble, the notes can be written off or converted into shares. They have no maturity date and sit just above equity in the capital structure, offering higher returns in exchange for greater risk.
ADVISORS- The bank enlisted HSBC, Mashreq, Abu Dhabi Commercial Bank, Citigroup Global, Crédit Agricole Corporate and Investment Bank, Emirates NBD Bank, Merrill Lynch, Mizuho International, MUFG Securities, and Saudi Fransi Capital as joint lead managers.
