Riyad Bank, one of the leading financial institutions in the Kingdom of Saudi Arabia, announced the successful completion of its issuance of US dollar-denominated Tier 2 sustainable capital instruments under its international medium-term debt program. This announcement represents a strategic step that strengthens the bank's position in international financial markets and underscores its commitment to financial and environmental sustainability standards.
In an official statement published on the Saudi Stock Exchange (Tadawul) website, the bank revealed that the total value of the offering reached US$1 billion, with the settlement date set for January 14. The total number of debt instruments issued was 5,000 sukuk/bonds, based on the minimum denomination and total issuance size, with a nominal value of US$200,000 per instrument.
Regarding financial returns, the annual yield for these instruments was set at 5.805%, a rate that reflects the issuance's attractiveness to investors amidst the volatility of global interest rates. The instruments have a 10-year maturity, with an option for the bank to redeem them after 5 years, subject to the terms and conditions outlined in the primary offering document. The bank also indicated that these instruments will be redeemable under specific conditions, which have been detailed for investors.
Promoting sustainable finance and the Kingdom's Vision 2030
This offering is not merely a routine financing procedure; it holds particular significance as it falls under the umbrella of “sustainable finance.” This trend aligns with the broader context of economic transformations in Saudi Arabia, where Vision 2030 and the Saudi Green Initiative place environmental, social, and governance (ESG) standards at the heart of economic priorities. Saudi banks are increasingly issuing green or sustainable debt instruments to finance environmentally friendly projects, reflecting the maturity of the Saudi banking sector and its alignment with modern global trends.
Strategic importance and international inclusion
Strategically, the issuance of Tier 2 capital instruments aims to bolster the bank's capital base, enhancing capital adequacy and providing greater flexibility for lending and future growth, while adhering to the requirements of the Saudi Central Bank (SAMA) and the Basel Committee on Banking Regulations. The success of this major offering underscores the high level of confidence international investors have in the Saudi economy and banking sector.
It is worth noting that these debt instruments will be listed on the London Stock Exchange (LSE), one of the world's oldest and most important financial markets, giving the issuance a global reach and facilitating trading among international investors. The bank also noted the possibility of selling these instruments under Regulation S of the US Securities Act of 1933, as amended, thus expanding the potential investor base outside the United States.
