(MENAFNEditorial) Al Hilal Bank (AHB), rated A1by Moody's and A+ by Fitch, priced its highly successful debut USD 500 million Sukuk issued at par with 3.267 per cent semi-annual profit rate with a spread of 170 bps over the US Dollar at 5-year mid swaps (MS).
AHB, Citigroup, HSBC, NBAD and Standard Chartered Bank acted as Joint-Lead Managers and Joint Bookrunners, with BIBD, Maybank IB, SIB and UNB acting as co-Managers.
Bookbuilding began on September 29, 2013 with the release of initial price thoughts at MS + 190bps area at Middle East open.
This ensured good momentum in the bookbuilding process, with the orderbook oversubscribed several times and topping USD 4.75 billion before price guidance was released. On October 1, 2013 London morning, a final price guidance of MS + 170bps was released to investors and the deal was priced at the final price guidance at 1:15pm London time.
Despite considerable volatility in the international market, AHB was able to take advantage of the resilience of the Sukuk market and the strong pent-up demand for quality issuers among Islamic investors to successfully price a transaction. The orderbook was more than 12 times oversubscribed – the highest oversubscription witnessed in any senior offering by a GCC bank.
A successful marketing strategy was undertaken by AHB's senior management team starting September 22, 2013 involving a series of fixed-income investor meetings in the key financial centres of Abu Dhabi, Dubai, Singapore, Kuala Lumpur and London.
AHB's credit story appealed to a high-quality investor base resulting in a well-diversified orderbook across geographies and investor types.
The geographical distribution of the issue was as follows: 37 per cent to the UAE, 21 per cent to the rest of the Middle East, 22 per cent to Asia, 17 per cent to Europe, and 3 per cent to US offshore investors. Banks subscribed to 48 per cent of the issue while the remaining distribution by investor type was Funds 31 per cent, Sovereign and Supra National Agencies 13 per cent, Private Banks 4 per cent and Insurance Funds 4 per cent.
The Trust Certificates will be listed on the Irish Stock Exchange under AHB's USD 2.5 billion Trust Certificate Programme.
Statement from Al Hilal Bank's Chairman
"We are very pleased with the excellent market reception to Al Hilal Bank's pioneering Sukuk issue. The highly successful offering demonstrates the confidence which international investors place in the UAE and its Islamic banking market and confirms the access to funding which our financial institutions and corporates enjoy from the Islamic Capital Markets. Investors' strong interest resulted in the order book reaching USD 6.3 billion, more than 12 times that of the offered amount.
This is a highly successful result that further confirms the credibility of Al Hilal Bank and investors' confidence in the promising outlook for the institution. The outcome is a testament to the invaluable support provided by our shareholder, the Government of Abu Dhabi, and is part of the ongoing visionary leadership of the UAE."
Statement from Al Hilal Bank's CEO Mr. Mohamed Jamil Berro
"Al Hilal Bank priced its highly successful debut international Sukuk on October 1, 2013 representing its first international Sukuk transaction. The success of Al Hilal's inaugural Sukuk reiterates the importance of an investor base that is focused and attentive to Islamic banking.
The overwhelming demand was an affirmation of Al Hilal's credit standing in the international financial community as well as AHB's strong growth. This milestone provides AHB with further dynamics for its future Sukuk issuances and the overwhelming success proves that the investors around the globe are highly receptive to our institution.
The 5-year offering was more than 12 times oversubscribed, with an orderbook of USD 6.3 billion, resulting in the most oversubscribed senior issuance by any GCC bank and also representing the strength of the AHB name in the international market.
We are also proud that the Sukuk priced at the tightest spread ever achieved by any Middle Eastern Islamic bank. This successful Sukuk issue will further strengthen AHB's balance sheet and its ability to fulfill its commitment to the economic development of Abu Dhabi and the UAE."
Geographical distribution stats:
UAE 37%
Middle East ex UAE 21%
Asia 22%
Europe 17%
US Offshore 3%
Investor type distribution stats:
Banks 48%
Fund Managers 31%
Supra/Agency 13%
Private Banks 4%
Insurance 4%
Terms of the issue
Sukuk Issuer: AHB Sukuk Company Ltd.
Sukuk Obligor: Al Hilal Bank P.J.S.C
Expected Issue Rating: A+ (Fitch) / A1 (Moody's)
Status: Senior Unsecured Obligations of the Obligor
Format: Regulation S
Structure: Mudaraba / Wakala Sukuk
Maturity: October 8, 2018
Settlement Date October 8, 2013
Size: USD 500 million
Profit Rate 3.267%
Price 100.00
Spread: 5-year Mid-Swaps + 170bps
Denoms: $200k/1k
Listing:Irish Stock Exchange
Governing Law:English & UAE Law
Joint Bookrunners: AHB, Citigroup, HSBC, NBAD, Standard Chartered
Co-Managers: BIBD, Maybank IB, SIB, UNB
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