Alinma Bank closed a USD 500 mn sustainable additional tier 1 (AT1) issuance, as it looks to shore up its core tier 1 capital, it said in a filing to Tadawul. The offering falls under the lender’s USD 1 bn AT1 capital issuance program, with a minimum subscription amount of USD 200k. It comes over a year after Alinma closed a similar USD 500 mn issuance.

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About the issuance: The perpetual certificates are callable after 5.5 years and carry a fixed annual return of 6.5%, set to be listed on the London Stock Exchange. The Reg S compliant offering was open to both local and international investors.

SOUND SMART- AT1 is a type of bond that banks use to shore up their capital and meet regulatory requirements. But unlike regular bonds, the issuer can skip interest payments or even write off the whole amount if it’s in financial trouble. In return for taking the extra risk, investors usually get higher returns.

Timeline: Subscriptions opened earlier this week and were scheduled to run until Friday, 23 May. The final settlement was due on Wednesday, 28 May.

ADVISORS- Alinma enlisted Alinma Capital, Abu Dhabi Islamic Bank, Emirates NBD, Goldman Sachs, JP Morgan, and Standard Chartered as joint lead managers.

Saudi companies have more in the pipeline: Earlier this month, SNB kicked off a SAR-denominated AT1 sukuk sale, with Bank Albilad currently planning a USD-denominated AT1 sukuk under its USD 2 bn program. Meanwhile, Cenomi Centers is gearing up to issue up to SAR 3.75 bn in sukuk, and Nomu-listed Molan Steel announced plans to issue sukuk worth SAR 20 mn back in March — but we haven’t heard anything new about these plans.

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