MANAMA: Gulf International Bank (GIB) announced today the successful closure of its Saudi riyal-denominated bond issue, which was launched in Saudi Arabia last week through the bank’s Riyadh branch.
Although the issue was originally targeted for SR1.5 billion, the bank said the final issue size had been increased to SR2 billion due to the substantial demand from investors. The order book was closed on Sunday, with orders totaling around SR5 billion, representing an oversubscription of more than three times.
GIB’s Saudi riyal bond issue is the first bond issue by a financial institution in the Kingdom in 2009. It also represents the largest ever book for a fixed income Saudi riyal private placement in the Kingdom, or indeed by any financial institution issuance in the Kingdom. The issue was privately placed with institutional investors in the Kingdom. Government institutions, commercial banks, insurance firms and industrial companies are among the investors.
The allocation process of the 3-year notes was finalized on Monday, while the settlement will be completed on Nov. 15.
The bonds have been priced at 127.5 basis points over SIBOR (Saudi interbank offered rate). The pricing was finalized below the original price indication of 130 to 140 basis points, again demonstrating the overwhelming demand and success of the transaction. GIB Financial Services and HSBC had been mandated as joint lead arrangers and book runners for the bond transaction, the first for GIB in Saudi riyals.
Commenting on the success of the bond issue, Yahya A. Al-Yahya, GIB’s chief executive officer, said “We are delighted with the outcome of this bond issue. The demand from a very diverse group of highly respected institutional investors reflects not only the market’s strong confidence in GIB, but also manifests the dynamism of Saudi Arabia’s economy and growing capital markets.”