Saudi Hollandi Bank has priced the first-ever Lower Tier II bond by a Saudi bank and the first under new Capital Markets Authorities Regulations, with a SAR 700 mln issue through joint-lead managers ABN AMRO and Saudi Hollandi Bank.
The issue comprises floating rate notes with proceeds being used to strengthen Saudi Hollandi’s capital base in line with Basel II as well as for ongoing capital management. All notes were placed on the basis of an exempt offering, open only to Saudi Arabian investors in compliance with the Capital Markets Law 2004.
The issue comprised seven-year floating rate notes, non-callable for five years, priced at +85 bps above the Saudi Interbank Offering Rate (SIBOR). Maturity is set for December 28, 2011, callable in 2009 and commission dates thereafter, All notes will be paid quarterly. Saudi Hollandi Bank is rated Baa2 by Moody’s and BBB+ by Fitch.
ABN AMRO also acted as capital structuring adviser on the transaction, which saw heavy oversubscription, with a mix of institutional, corporate and private investors from the Kingdom of Saudi Arabia participating in the transaction.
Chris Wilmot, Treasurer of Saudi Hollandi Bank, said: “We are delighted with the success of this transaction, which clearly shows Saudi Hollandi Bank as an innovator for debt capital markets in the Kingdom. “This transaction marks the beginning of Saudi Hollandi Bank’s efforts to develop the Saudi debt markets with the introduction of new issuers, backed by ABN AMRO’s highly regarded global debt markets franchise and structuring expertise,” he continued.
Zafar Alam, Global Head of Emerging Markets at ABN AMRO, said: “The strong investor demand for these bonds illustrates the market’s confidence in the continued growth and development of Saudi Hollandi Bank. “Institutions across the Gulf States are looking to implement Basel II capital accords and we expect further similar subordinated issues in the New Year.”
