Will Aramco pull the trigger today?

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WHAT WE’RE TRACKING TODAY

Aramco could pull the trigger on its USD 10 bn secondary sale any moment now

Good morning, friends. It’s another busy morning for capital markets. The Kingdom has closed a USD 5 bn sukuk with heavy investor appetite, it’s the last day for retail investors to ask for a piece of fintech player Rasan’s initial public offering, and Aramco looks set to go to market with a blockbuster USD 10 bn sale of existing shares sometime between today and Sunday.

UP FIRST- Aramco looks ready to pull the trigger any moment now on blockbuster secondary sale. The Wall Street Journal expects the oil giant to go ahead with a USD 10-20 bn sale “as soon as this week” while Bloomberg claims that it will be a USD 10 bn sale and that the formal launch of the transaction will come on Sunday.

The prospect of a sale has already attracted “informal interest” from investors, Bloomberg notes. Aramco will boost its dividend this year by as much as 30% over 2023 thanks to a performance-based payout despite a 14% year-on-year drop in net income in 1Q 2024, making the company an attractive dividend play.

The oil giant’s shares + Tadawul are down ahead of the offering: A strong pipeline of IPOs and expectations that the Aramco sale will absorb market liquidity has seen Tadawul investors holding onto cash for fresh paper. Less liquidity in the market coupled with expectations that Opec+ will extend voluntary oil cuts when it meets next week pushed Aramco’s shares to their lowest level in over a year, Bloomberg reported. Aramco shares are down just about 12% YTD, closing at SAR 29.05 yesterday, which is below its 2019 offering price of SAR 32.00.

What the pundits are saying: “Saudi Aramco’s share price has been under pressure from an oil production level that is limited around 9 mn barrels a day due to the ongoing OPEC+ cuts,” said Salih Yilmaz, senior industry analyst at Bloomberg Intelligence. “It continues to demand a higher price-to-earnings valuation versus international oil major peers.”

BACKGROUND- Reuters reported last week that Aramco could proceed with the sale in June, with the newswire seeing the oil giant put on a full roadshow to market the offering rather than doing an accelerated book build. The PIF increased its stake in Aramco to 16% in March as news of the potential sale surfaced. If the offering goes ahead, it would be one of the world’s largest offerings in recent years. Aramco raised USD 29.4 bn on Tadawul in 2019 in what remains the biggest IPO in history.

IN OTHER CAPITAL MARKETS NEWS this fine morning: The two-day bookbuilding window for the retail tranche of Rasan’s IPO wraps up today with a maximum of 2.3 mn shares up for grabs. Rasan priced its IPO on Tadawul’s main market at SAR 37 per share, pegging it at the top of its initial price range, after the institutional offering drew strong demand with a 129.1x oversubscription rate. The fintech startup is taking a 30% stake to the market.

Rasan is one of four high-profile IPOs in the market right now that have together generated a combined SAR 659 bn in demand from investors here and abroad. Fakeeh Care, Saudi Manpower Solutions, and Miahona are also nearing the finish line on share sales, with other would-be issuers set to come into the market as the year grinds on.

WHISPERS-

#1- Saudi Arabia is in the lead to capture ownership of a new men’s professional tennis tournament, Bloomberg reports, as the Kingdom pushes deeper into tennis. The PIF already has the naming rights to the men’s and women’s tour rankings and Saudi will host the women’s WTA season-ending tournament for three years starting this fall.

PIF-back Surj Sports Investment is in advanced talks with the ATP on commercial terms, timing, and the venue for the men’s tournament.

#2- Is Crown Prince and Prime Minister Mohamed bin Salman attending the G7 summit in Italy next month? That’s the suggestion from Reuters, which quotes an unnamed source as saying the Crown Prince could be among those invited to attend the 13-15 June summit in Puglia. UAE President Sheikh Mohammed bin Zayed Al Nahyan is confirmed as participating.

#3- HSBC is making a play in the private banking space, having hired 100 bankers last year for a push to “cater to the growing number of mn’aires and bn’aires moving to the Middle East,” Bloomberg writes, citing comments by Aladdin Hangari, who leads HSBC’s private banking push in our part of the world.

WATCH THIS SPACE-

#1- The Saudi Water Partnership Company (SWPC) is gearing up to launch a SAR 2 bn water reservoir project in the Eastern province, with a storage capacity of 5 mn cubic meters to supply desalinated water to Dammam, Khobar, Qatif, Saihat, Dhahran, Safwa, and Al Ahsa, Aleqtisadiah reports citing unnamed company sources. SWPC said on Monday that it had reached financial close for its SAR 1.5 bn Juranah Independent Strategic Water Reservoir in Makkah.

#2- Poland’s LOT Airlines will begin operating three weekly flights between Riyadh and Warsaw beginning Tuesday, 4 June, the General Authority of Civil Aviation said on X.

SPORTS-

#1- Al Hilal extended the contract of its manager Jorge Jesus for another year on Tuesday after the team was crowned champion of the Saudi Pro League without a single defeat.

#2- A Christmas showdown between Usyk and Fury in Riyadh: A rematch between Oleksandr Usyk and Tyson Fury was set for Saturday, 21 December, General Entertainment Authority Chairman Turki Al Sheikh said in a post on X. Usyk became the first four-belt undisputed heavyweight champion in history after beating Fury earlier this month in Riyadh on a split decision in a fight that went well into the night.

The rematch is getting widespread coverage: Reuters | The Guardian | BBC | Sky Sports.

#3- Saudi’s Falcons Esports locked in the Apex Legends “superteam” after signing ImperialHal, Zer0, and Genburten, according to a post on X. Previously divided between the top two teams of TSM and Dark Zero, the players are widely regarded the best in the game globally with an impressive pedigree of four Split Playoffs trophies and three ALGS Championships between them. The trio will debut in the upcoming ALGS Split 2 North America & EMEA tournament on 1 June to qualify for Split 2 Playoffs and is expected to play in Riyadh’s Esports World Cup in July.

DATA POINTS-

The Saudi space industry generates around SAR 2 bn in revenues every year, a small fraction of the global industry, which is worth the equivalent of about SAR 1.6 tn annually, Aleqtisadiah reports, citing unnamed Saudi Space Agency sources.

ICYMI- The Public Investment Fund launched a commercial satellite and space company named Neo Space Group earlier this week. The Kingdom could be running space tourism trials later this year, Saudi Space Agency CEO Mohammed Al Tamimi said at the Future Aviation Forum last week. “Within a window of 60 days from now, there will be an announcement to do some trials here in Saudi Arabia about space tourism,” he said.

PSA-

WEATHER- Riyadh’s skies are looking clear with a daytime high of 43°C and a low of 29°C, while the mercury in Makkah is rising even more to peak at 49°C with the low at 30°C. Jeddah is on the windy side with a daytime high of 39°C and a low of 29°C.

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THE BIG STORY ABROAD-

It’s a mixed bag on global front pages this morning as a number of stories captivate the attention of the business pages.

No verdict on Trump’s criminal hush-money trial. Jurors ended their first day of deliberation last night without reaching a verdict. The 12-person jury has to reach an unanimous agreement over a verdict, or else the judge will declare it a mistrial. Jurors deliberated for five hours and sent two notes asking questions of the judge. (Politico | AP | Bloomberg)

Speaking of The Donald: Will Elon Musk get a cabinet post if there’s a Trump White House v2? The two are now “friendly” and sources tell the Wall Street Journal that Musk could well be in line for an advisory role if there’s a remake of the Agent Orange Show.

MEANWHILE- BHP has abandoned its bid for mining group Anglo American after Anglo American refused to extend takeover talks. “We were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost and … we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive,” BHP CEO Mike Henry said in a statement (pdf).

AND IN TECH- Gemini now speaks Arabic. Google’s Gemini and Gemini Advanced are now available to Arabic-speaking users — Gemini 1.0 Pro is available as a standalone Android app or as a tab in the Google app on iOS. The more advanced Gemini flavour, which is “capable of coding, logical reasoning, following nuanced instructions and collaborating on creative projects,” can be accessed for EGP 699.99 a month. Download it yourself: Google’s Play Store or Apple’s App Store.

Two notable firsts for women: Claudia Sheinbaum, who has a PhD in energy engineering, looks set to become Mexico’s first woman president when voters go to the polls this coming Sunday. And Yale has named Maurie McInnis, the respected historian, its next president. She’ll be the first woman to hold the job on a permanent basis.

ALSO WORTH READING THIS MORNING- From the Baby Boom to the Baby Bust, an op-ed by the FT’s Martin Wolf, details the challenges that come with falling fertility rates.

AND on the downside of working from home — US workers are increasingly lonely as they make fewer work friends with their workday dominated by virtual meetings and faceless chats.

CIRCLE YOUR CALENDAR-

The two-day Global Project Management Forum will open in Riyadh on Sunday, 2 June, bringing together project managers and stakeholders for talks on the project management ecosystem and emerging technologies.

The #Growth Summit is set to kick off on Wednesday, 5 June, bringing together marketing, product and growth experts at the InterContinental in Riyadh. You can request your invite here.

The Global EV and Mobility Tech Forum will open its doors on Wednesday, 10 July to Thursday, 11 July at the Riyadh International Convention and Exhibition Center. The event will bring together policymakers, NGOs, and startups.

Gov’t closes USD 5 bn sukuk issuance 4x oversubscribed

The National Debt Management Center (NDMC) raised USD 5 bn with the sale of USD-denominated sukuk in an offering that was 4x oversubscribed, it said in a statement. The offering is part of the Kingdom’s Global Trust Certificate Issuance Program and is the “first triple tranche sukuk issuance that is a part of NDMC's strategy to diversify the Kingdom's funding sources and expand the investor base.”

The details: The triple-tranche offering included a three-year tranche worth USD 1.25 bn, a six-year tranche worth USD 1.5 bn, and a 10-year tranche worth USD 2.25 bn. This marks the seventh offering under the Global Trust Certificate Issuance Program and the first since the USD 6 mn issuance in May 2023. This is different from the Global Medium Term Note Issuance Program which offers debt securities in the format of USD bonds.

The program aims to “ensure the Kingdom's continuous presence in debt markets and manage the debt repayments for the coming years while taking into account market movements and the government debt portfolio risk management,” NDMC said. Officials at multiple levels of government and the PIF have repeatedly said in recent months that they don’t want to crowd private business out of the domestic debt market.

ADVISORS- Citi, Goldman Sachs and BNP Paribas are joint bookrunners and global coordinators for the sale, while Aljazira Capital, JPMorgan, and Standard Chartered were appointed passive joint bookrunners.

Horizon Educational set for Nomu debut on Sunday

Riyadh-based school operator Horizon Educational will ring the opening bell on Tadawul’s parallel market Nomu on Sunday to mark the first day of trading on its shares, Tadawul said in a statement. Horizon Education’s offering was 6.8x oversubscribed as it priced its Nomu IPO at the top of range at SAR 54 per share.

Background: The school operator is taking a 20% stake to Nomu by issuing 500k new shares to finance its expansion plans, acquire new branches, and ramp up its campus capacities.

What to expect on Sunday: Shares will be allowed to trade within a ±30% band in daily price fluctuation limits and a ±10% band in static price fluctuation limits.

Proceeds + market cap: The final price would allow the company to raise SAR 27 mn in IPO proceeds, and would give it a market cap of SAR 135 mn on the first day of trading, according to our calculations.

ADVISORS- Yaqeen Capital is quarterbacking the transaction as financial advisor and lead manager, while RSM is providing counsel. Receiving agents include Alistithmar Capital, Alinma Investment, SNB Capital, AlJazira Capital, Riyadh Capital, ANB Capital, Albilad Capital, Al Rajhi Capital, Derayah, and Saudi Fransi Capital.

GAS secures contracts for Saudi’s primary natural gas pipeline

Nomu-listed Gas Arabian Services (GAS) signed contracts with Aramco to provide engineering, procurement, and construction (EPC) work worth SAR 760.9 mn for the expansion of the Kingdom’s primary natural gas pipeline, according to two separate disclosures to Tadawul (here and here). This comes a few months after GAS received two non-binding letters of intent from Aramco for the expansion of the vital pipeline.

What we know: GAS will provide EPC work worth SAR 416.2 mn for the East and Qassim Clusters and SAR 344.6 mn for Shedgum to EWPS-1 as part of the USD 10 bn third phase of expansion a program to expand Aramco’s Master Gas System (MGS-3).

GAS was the first to see its letter of intent formalized: Aramco issued in February letters of intent to contractors it wants to hire to carry out work on the MGS-3, including GAS and a consortium between local contracting firm Nesma & Partners and Italian construction firm Sicim among others. Also included: China-based firms China Petroleum Engineering & Construction Company, Sepco, and Sinopec, as well as Indian multinational Larsen & Toubro Energy Hydrocarbon and Kalpataru Power Transmission, among other firms.

With an update: Sources told Meed yesterday that Aramco has received revised commercial bids from contractors for one of the packages under the project. They said that the oil giant asked unnamed contractors to send revised bids after prices submitted by contractors earlier “exceeded Aramco’s budget.” the sources said. The scope of the EPC work under the package has also been revised, they said.

Baker Hughes is also taking part: Aramco awarded last month US oilfield services provider Baker Hughes a contract to supply gas technology equipment for the MGS-3. The supply order was awarded to Baker Hughes in 1Q 2024.

SOUND SMART- Built in the mid-1970s, the MGS is the Kingdom’s main gas pipeline that includes a network linking gas production and processing sites across the Kingdom. Aramco has for some years now been working to expand the system. The MGS now has a capacity of 12.5 bn standard cubic feet per day.

About GAS: Established in 1992 as a trading house in Dammam, the company evolved to become a total technical solutions provider, venturing into trading of industrial products and solutions as well as manufacturing, according to its website. It boasts clients in the oil, gas, petrochemicals, electricity and cement industries and is an approved vendor of Aramco, Saudi Electricity Company, and the Royal Commission of Jubail and Yanbu.

PIF takes lead as most valuable sovereign wealth fund brand

The Public Investment Fund (PIF) was crowned the most valuable sovereign wealth fund brand, valued at USD 1.1 bn, according to a release from Brand Finance. “PIF’s value is largely driven by high scores for the brand’s awareness, purpose and commitment to positive growth,” it said. PIF came second place in the strongest sovereign wealth fund brand category, scoring 62.1/100 with an A+ rating, not too far off from the UAE’s largest sovereign wealth fund Adia which secured the top spot at 63.9. PIF also ranked sixth globally in brand value to assets under management ratio.

BlackRock, the world’s largest asset manager, was named the world’s most valuable asset management brand with a brand value of just over USD 7 bn. BlackRock’s “ aggressive hunt for growth in Saudi Arabia” helped it line up USD 5 bn commitment from the PIF as part of a push to grow in the Kingdom. It is setting up a new multi-asset investment platform which will be run by BlackRock and PIF.

ALSO- King Salman will host and cover the expenses of 2.3k hajj pilgrims from over 88 countries, including 1k pilgrims from Palestine, state news agency SPA reports.

Munir bin Mahmoud Al Desouki re-elected as the Global Research Council vice chairman

#1- The Global Research Council has re-elected the Kingdom’s representative Munir bin Mahmoud Al Desouki (Linkedin) as its vice chairman, state news agency SPA reports. The council is a virtual organization, composed of the heads of science and engineering funding agencies from around the world, and aims to promote the sharing of data and best practices for high-quality collaboration among the member agencies. Al Desouki is currently the president of King Abdulaziz City for Science and Technology, and chairman of the Centre for the Fourth Industrial Revolution network.

#2- The board of Tadawul-listed Tourism Enterprises Company (Shams) has named Khalid Al Bawardi (bio) as its new chairman, it said in a disclosure to Tadawul. Al Bawardi — who is a member of the Shura Council — previously served as board member at Shams in early 2000s. He was also a board member at several government agencies, including aviation regulator Gaca, Saudi Ports Authority (Mawani) and others. Shams’ board appointed Abdullah bin Omar Al Suwailem (bio) as vice chairman and managing director. Al Suwailem assumed his position as managing director and CEO in January 2023.

PIF is once again in the spotlight in the foreign press

It is a mixed bag for Saudi in the foreign press today, with PIF’s spending shift, the Kingdom’s renewable energy ambitions, potential weaponry from the US, and an expulsion of Iranian media crew in Saudi all making the rounds.

#1- The Public Investment Fund’s renewed appetite for domestic spending has international asset managers worried it may be deploying less capital abroad, Bloomberg reports citing people it says are familiar with the matter. With a USD multi-bn pipeline of giga-projects at home — think USD 500 mn development Neom — the deep-pocketed wealth fund may be shifting its focus away from passive outflows into “global private equity, infrastructure and hedge funds,” the sources said.

REMEMBER- The PIF is ramping up its annual deployment capacity to USD 70 bn a year starting 2026, out of which 25% are set to be earmarked for international investment, and c. 70% earmarked to drive economic growth and diversification at home, governor Yasir Al Rumayyan had said at the FII Priority conference in Miami in February. This is a big step-up from its current annual spending clip of USD 40-50 bn.

What could be on Rumayyan’s mind: The PIF could opt to focus on injecting capital in leading firms abroad, two unnamed executives at two private equity firms told the business news service. It could also explore investments in local companies with a solid market base, they said.

#2- Meanwhile, Forbes claims to know which advanced weaponry Saudi may be getting out of its pending defense pact with the US, basing its predictions on Saudi’s previous military purchase history from the US. Those include the F-15SA Saudi Advanced fighters which was the most advanced multirole strike fighter until recently or the more advanced F-15EX Eagle II developed by the US for Qatar.

#3- The Kingdom’s ambitious plan to rely on renewables for 50% of its electricity generation by 2030 is the subject of a piece in The New York Times exploring Saudi’s renewables potential the obstacles the Kingdom may face on the road.

Geidea launches UAE payment platform with HSBC. Plus: Eviq and Lucid to expand charging infrastructure nationwide

PAYMENTS-

HSBC + Geidea: Our friends at HSBC have launched an e-commerce digital payment platform, Omni Collect, in the UAE in partnership with Saudi fintech outfit Geidea, according to a press release (pdf). Omni Collect is accessible to corporate clients on HSBCnet, allowing businesses to collect digital payments across multiple channels, including credit, debit cards, Apple Pay and Samsung Pay. “The partnership with Geidea will see the fintech provider integrate a merchant acquiring facility within Omni Collect, allowing all HSBC business and corporate clients access to the card receivables solution, giving them greater understanding of their collections data,” HSBC said. Geidea was founded by Abdullah Faisal Al Othman (LinkedIn), who also serves as the company’s chairman.

EVs-

PIF-baked EV maker Lucid and the Electric Vehicle Infrastructure Company (Eviq) will expand fast-charging infrastructure across Saudi after signing a “strategic MoU,” Saudi Gazette reported. The partnership will see Lucid and Eviq developing fast EV charging stations. Information on the size, value and timeline of the project was not disclosed. Eviq — a JV between the PIF and Saudi Electricity — opened its first fast EV charging stations in Riyadh earlier this year, with plans to set up over 5k fast chargers in some 1k locations across Saudi cities by 2030.

Eviq also signed a cooperation agreement with Riyadh Municipality development arm Remat Al Riyadh Development to install fast chargers across the Kingdom, it said in a post on X. Eviq also signed an agreement with commercial real estate company Al Andalus Property to install 10 new 50 kW EV stations in four malls across Riyadh and Jeddah, it said on X.

TECHNOLOGY-

#1- Solutions by stc signed an agreement to form a joint venture with Jeddah Development and Urban Regeneration (Jedco), it said in a disclosure to Tadawul. The JV — in which solutions will own a 70% stake with Jedco holding the remaining 30% — will provide “cutting-edge solutions” for projects implemented by Jedco and its subsidiaries. These include digital solutions, digital platforms and information technology infrastructure, solutions said. The JV is still subject to regulatory approvals, according to the disclosure. Telecom giant stc owns 79% of solutions.

#2- Saudi Azm for Communications and IT landed a project with small and medium enterprises regulator Monsha’at to develop and operate the authority’s internal systems, it said in a disclosure to Tadawul. The project's value exceeds 5% of Azm’s total 2023 revenues, it said.

TELECOMS-

Beyond One to bring eSIMs to Riyadh Airport: Beyond One — owner and operator of Virgin Mobile MEA and Virgin Mobile Latam — is introducing a global travel eSIM that allows users to access mobile data in over 180 countries, it said in a post on Linkedin. The move comes as part of an agreement it signed with Riyadh Airports Company to boost digital connectivity at Riyadh’s King Khalid International Airport. No further information was disclosed.

TOURISM-

#1- PIF-owned Cruise Saudi, a first mover in the local maritime cruise tourism industry, received the first “maritime tourist agent for cruise ships” license issued by the Saudi Red Sea Authority in a move to further develop the sector, SPA reports. Cruise Saudi operates across three destinations: Jeddah, Dammam, and Yanbu. The Jeddah-based company aims to “become a world class cruise port and cruise line operator driving the development of destination experiences to build a thriving cruise sector in Saudi.”

#2- Warner Bros. Discovery to promote Soudah Peaks as luxury tourism destination: Soudah Development — a real estate development company fully owned by the PIF — signed a partnership agreement with media giant Warner Bros. Discovery International to promote tourism in Soudah and areas of Rijal Almaa located southwest of the Kingdom, according to a statement. The one-year partnership will focus on the area’s luxury mountain tourism destination Soudah Peaks and surrounding areas through the production of three short documentaries, which will be aired during the summer across the US, Europe, Middle East, Africa and India.

About the project: Launched by Crown Prince and Prime Minister Mohammed bin Salman las t year, Soudah Peaks is situated 3k meters above sea level in what is the Kingdom’s highest point. It extends from the region of Soudah to parts of Rijal Almaa with a project area of 627 square kilometers. It aims to contribute USD 7.8 bn to the Kingdom’s cumulative GDP by 2033.

TRADE-

The Saudi Export-Import Bank (Saudi Exim Bank) signed a non-binding agreement with Australian investment bank Macquarie Group to provide credit facilities worth USD 500 mn to fund exports of Saudi’s non-oil products and services, it said in a post on X. The move aims to connect local exporters to more than 156 markets globally.

TRANSPORT-

#1- Saudi Arabia Railways (SAR) raised the capacity of its high-speed Haramain train service by 100k seats to a total of 1.6 mn seats in preparation for the Hajj season, state news agency SPA reported. Some 430 trips were also added to reach a total of 3.8k trips to accommodate for the influx of pilgrims. The railway’s 453-km line connects Makkah to Madinah through Jeddah through five stations.

FINTECH-

#3- Pharma player Al Mujtama Al Raida Medical is set to sign a SAR 11.4 mn contract with a German company that would provide the Nomu-listed firm with an automated system for its main warehouse and one of its pharmacies, it said in a disclosure to Tadawul. This is in a bid to “reduce labor costs and complete operations within the warehouse in the shortest possible time and with the highest accuracy.”

SUSTAINABILITY-

ُThe government unveiled a number energy efficiency initiatives at Saudi ESCO 2024 earlier this week, Asharq Al Awsat reported.

PIF leads the way: Tarshid — an energy services company wholly owned by the PIF — unveiled plans to launch 50 solar photovoltaic projects across the Kingdom this year after it launched ten projects last year. Tarshid also plans to launch 84 retrofit projects to save up to 2.1 terawatt-energy across the Kingdom.

Other initiatives include:

Updated regulations for licensing businesses that sell energy-efficiency services;
An updated user guide for national measurement and verification of energy efficiency;
The launch of an independent energy-auditors platform;
The launch of a platform that will showcase potential investments in energy efficiency projects.

M&A WATCH-

Bank AlJazira buys out Solidarity Group’s stake in AlJazira Takaful: Bank AlJazira signed an off-market purchase agreement to buy Solidarity Group’s 7.05% stake in AlJazira Takaful Taawuni, it said in a disclosure to Tadawul. The transaction — which came following a non-objection by Saudi Central Bank (Sama) — brings the bank’s ownership in the ins. Company up to 29.36%, according to a separate disclosure by AlJazira Takaful Taawuni. The value of the agreement was not disclosed.

The rationale: The moves as Bank AlJazira’s looks to deepen its exposure to the ins. sector.

REAL ESTATE-

US-based IT services company DXC Technology opened a new office space in Riyadh, according to a statement. The office — located at King Abdullah Financial District in Riyadh — will be home to “technology-enabled reconfigurable spaces to support collaboration and connection…and rooms incorporating multi-functional and adaptable spaces to meet the evolving needs of customers.” DXC has been operating in Saudi for over 20 years, providing its services to 14 customers across diverse industries. Some of its technology partners in Saudi include ServiceNow, SAP, Oracle, Microsoft, AWS and Splunk.

Mashreq Bank taps banks for AT1 bond issuance

Our friends at Mashreq are set to issue benchmark-sized, USD-denominated additional tier 1 (AT1) bonds after hiring banks to advise on the issuance, Reuters reports, citing an arranging document it saw. The bonds will be perpetual and non-callable for 5.5 years, meaning Mashreq can’t redeem them in that period except by paying a penalty.

Benchmark-sized? A “benchmark sized” issuance is usually at a minimum valued at USD 500 mn.

What’s next: Investor meetings start today, according to the newswire.

Uh, Enterprise, what are AT1 bonds? They’re a common way banks raise core tier-one capital without diluting shareholders by raising equity. 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. AT1 certificates are “perpetual” in that they have no fixed maturity date. They pay interest in much the same way as a bond does, but usually can be converted into equity in some circumstances — that’s why they’re often called CoCos in the industry, for “contingent convertibles.”

CoCos are common in the banking world — HSBC and Deutsche Bank use them and Standard Chartered announced a USD 1 bn CoCo in February of this year, as did Saudi’s Alinma Bank with a USD 1 bn issuance.

The timing is good for Mashreq: Ratings agency Moody’s has upgraded Mashreq’s long-term deposit and senior unsecured ratings to A3, up from Baa1, assigning it a stable outlook, the lender said in a statement. The bank cited its “operational resilience” as well as improvements in credit fundamentals, asset quality, profitability, and robust funding and liquidity profiles for the upgrade.

ADVISORS- Mashreq has appointed Abu Dhabi Commercial Bank, Al Ahli Bank of Kuwait’s DIFC branch, BofA Securities, Citi, Emirates NBD Capital, FAB, Kamco Investment Company, Mashreq, and Mizuho as joint lead managers and joint bookrunners.

Also worth knowing about this morning:

The International Monetary Fund sees China’s economy growing 5% this year, up from its previous forecast of 4.6% growth for the world’s second largest economy. However, the Fund warned that growth would slow to 4.5% next year, and to 3.3% by 2029 due to “an aging population and slower expansion in productivity.” (Reuters)

All 82 economists in a Reuters poll see the European Central Bank cutting interest rates in June, with a majority also forecasting further cuts in September and December.

MARKETS THIS MORNING-

A global bond selloff yesterday saw investors dump equities as jitters set in, with stocks in the US, UK, and Europe closing the day in the red. Asian markets are playing catch-up this morning, with all major benchmarks in negative territory (led by the Nikkei’s nearly 1.7% dip at dispatch time). US and European stock futures are down sharply this morning after yesterday’s selldown and Salesforce’s downbeat forecast. Revenue at the software giant fell short of Wall Street expectations for the first time since 2006.

TASI	11,697	+0.3% (YTD: -2.3%)
MSCI Tadawul 30	1,461	+0.8% (YTD: -5.8%)
NomuC	26,303	+0.3% (YTD: +7.2%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	6% repo	5.5% reverse repo
EGX30	27,090	-0.4% (YTD: +8.8%)
ADX	8,711	-0.4% (YTD: -9.1%)
DFM	3,960	-0.7% (YTD: -2.5%)
S&P 500	5,267	-0.7% (YTD: +10.4%)
FTSE 100	8,183	-0.9% (YTD: +5.8%)
Euro Stoxx 50	4,963	-1.3% (YTD: +9.8%)
Brent crude	USD 83.60	-0.7%
Natural gas (Nymex)	USD 2.49	-3.8%
Gold	USD 2,359.90	-0.2%
BTC	USD 67,639	-1.3% (YTD: +60.9%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.3% yesterday on turnover of SAR 6.2 bn. The index is down 2.3% YTD.

In the green: SNB (+5.8%), Medgulf (+5.0%) and Anaam Holding (+4.6%).

In the red: Zoujaj (-4.3%), Al Babtain (-3.8%) and Spimaco (-3.6%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.3% yesterday on turnover of SAR 32.1 mn. The index is up 7.2% YTD.

In the green: Knowledgenet (+16.0%), Burgerizzr (+8.7%) and Nofoth (+7.2%).

In the red: Miral (-10.0%), Osool and Bakheet (-9.5%) and Al Modawat (-7.2%)

CORPORATE ACTIONS-

Renewables giant Acwa Power wrapped up its fractional shares sale, raising some SAR 2.5 mn in proceeds, it said in a disclosure to Tadawul. The proceeds from the sale were distributed to eligible shareholders.

The board of Almunajem Foods has approved distributing dividends of SAR 75 mn at SAR 1.25 per share for H1 2024, it said in a disclosure to Tadawul.

The Capital Market Authority has cleared Nomu-listed Academy of Learning to increase its capital by 50% to SAR 90 mn, according to a statement. The capital increase will see the transfer of SAR 30 mn in retained earnings to the company’s capital.

Industry Minister Al Khorayef lands in the Netherlands for investment-focused talks

Industry and Mineral Resources Minister Bandar Al Khorayef discussed cooperating on mining, trade, and industry with Dutch Economic Affairs and Climate Policy Minister Micky Adriaansens and the Foreign Trade and Development Cooperation Minister Liesje Schreinemacher on Tuesday, according to a press release. The minister also met with officials from the Port of Rotterdam on Monday to discuss potential partnerships in the logistics sector.

CALENDAR

JUNE

2 June (Sunday): OPEC+ meeting.

2-3 June (Sunday-Monday): Global Project Management Forum, Riyadh.

3-4 June (Monday-Tuesday): Electronic Applications Exhibition, Al Dammam.

4-7 June (Tuesday-Friday): Saudi Sports Show, Riyadh.

4-7 June (Tuesday-Friday): Aqarat Expo, Riyadh.

5 June (Wednesday): GROWTH Summit Riyadh, InterContinental Riyadh, Riyadh.

5 June (Wednesday): World Environment Day.

5 June (Wednesday): Digital Transformation Summit, Riyadh.

6 June (Thursday): Saudi Manufacturing Show, Riyadh.

10 June (Monday): #teamLabBorderless, Jeddah.

10 June (Monday): Deadline to register for school bus services for the upcoming academic year.

14-22 June (Friday-Saturday): Banks and capital markets closed for Eid Al Adha holiday.

JULY

4 July-25 August: (Thursday-Sunday): Esports World Cup, Boulevard Riyadh City, Riyadh.

10-11 July: (Wednesday-Thursday): Global EV & Mobility Tech Forum, Riyadh International Convention & Exhibition Center, Riyadh.

AUGUST

12-15 August (Monday-Thursday): The Saudi Food Expo, Riyadh

SEPTEMBER

10-12 September (Tuesday-Thursday): Global AI Summit, Riyadh.

11-12 September (Wednesday-Thursday): The Saudi Event Show, Riyadh.

17-19 September (Tuesday-Thursday): EV Auto Show, Riyadh.

18-19 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam.

24-26 September (Tuesday-Thursday) Saudi Infrastructure Expo, Riyadh International Convention and Exhibition Center, Riyadh.

23 September (Monday): National Day (national holiday).

OCTOBER

21-22 October (Monday-Tuesday): Smart Ports & Logistics Transformation Summit, Riyadh.

29-31 October (Tuesday-Thursday): Future Investment Initiative Conference, Riyadh.

31 October (Thursday): No-visa travel for Saudis to Montenegro on charter flights expires.

NOVEMBER

2-9 November (Saturday- Saturday): WTA Finals, Riyadh.

26-28 November (Tuesday-Thursday): Saudi Electricity Expo, Riyadh.

11-14 November (Monday-Thursday): Cityscape Global, Riyadh.

18-20 November (Monday-Wednesday): The Heavy Equipment and Truck Show, Dammam.

25-27 November (Monday-Wednesday): World Investment Conference, Riyadh.

26-28 November (Tuesday-Thursday): Saudi Electricity Expo, Riyadh.

DECEMBER

2-13 December (Monday-Friday): Conference of the Parties (COP16) to the United Nations Convention to Combat Desertification, Riyadh.

11 December (Wednesday): FIFA Congress, which will decide the hosting countries for the FIFA World Cup 2030 and 2034

Signposted to happen sometime in 2024:

The AFC Champions League Elite

2025

FEBRUARY 2024

10-13 February (Monday-Thursday): Leap 2025, the Kingdom’s premier tech investment conference.

2026

UN Trade and Development Global Supply Chain Forum to take place in Saudi Arabia.

2027

The World Water Forum takes place in Riyadh.

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