Bank Albilad announced in an official statement issued today, Tuesday, its intention to begin issuing Additional Tier 1 capital sukuk denominated in US dollars. This offering comes as part of the bank's financial strategy to strengthen its capital base. The sukuk will be offered privately to qualified investors inside and outside the Kingdom of Saudi Arabia, under its dedicated Additional Tier 1 capital sukuk issuance program, which has a total size of US$2 billion.
In its announcement published on the Saudi Stock Exchange (Tadawul) website, the bank explained that it has appointed a consortium of major financial institutions to manage this potential issuance. The list of issue managers includes: Abu Dhabi Commercial Bank BGSC, Albilad Capital, Dubai Islamic Bank BGSC, Emirates NBD Capital Limited, HSBC Bank PLC, Mashreq Bank PSC, Standard Chartered Bank, and Warba Bank K.S.C.P. The bank indicated that the final offering size and detailed terms will be determined later based on market conditions and supply and demand.
Context of Issuance and Importance of Tier 1 Sukuk
: Tier 1 capital sukuk are hybrid financial instruments that combine features of both debt and equity. They are typically perpetual (without a fixed maturity date) and redeemable by the issuer after a specified period. Banks and financial institutions utilize this type of issuance to bolster their capital adequacy in accordance with Basel III requirements and international banking standards, without the need to issue new shares that could dilute existing shareholders' stakes. Pricing in US dollars also aims to diversify funding sources and attract a wider range of international investors, thereby strengthening the bank's position in global markets.
The economic impact and development of the financial sector:
This event is of particular importance given the economic momentum in Saudi Arabia under Vision 2030, specifically the Financial Sector Development Program, which aims to deepen the debt market and develop the sukuk and bond markets. The move by Saudi banks, such as Bank Albilad, towards international markets reflects the strength of the Saudi banking sector's financial solvency and the high level of confidence it enjoys among foreign investors. Furthermore, the success of such offerings contributes to providing banks with the necessary liquidity to expand their lending operations and finance major development projects in the Kingdom, which positively impacts the local economic cycle and enhances the stability of the financial system in the region.
