Bank Sukuk – SNB US$850m Fixed Rate Benchmark Sukuk

SNB Returns to International Sukuk Market After an Absence of Three Years with a Fixed Rate Benchmark RegS US$850m Sukuk Offering in February 2024

The Saudi National Bank (SNB) (formerly National Commercial Bank (NCB)), the largest bank in the Kingdom in terms of assets, returned to the international debt market after an absence of three years with a 5-year benchmark Reg S Sustainability senior unsecured US$850 million Sukuk Wakala/Commodity Murabaha issuance on 27 February 2024. The Sukuk certificates were issued through SNB Sukuk Limited, a wholly owned special purpose vehicle incorporated in the Cayman Islands, acting as Trustee on behalf of the Obligor SNB.

The Sukuk was issued under SNB Sukuk Limited’s updated US$5 billion Trust Certificate Issuance Programme arranged by HSBC and SNB Capital, and which has been assigned a rating of “A-” by Fitch Ratings and a rating of “A-” in respect of the Senior Certificates and “BBB” in respect of the Tier 2 Certificates by S&P Global.

In a disclosure to the Saudi Stock Exchange (Tadawul), SNB said that the fixed rate Sukuk was priced at a final profit rate of 5.129% per annum payable semi-annually in arrears, which translates into a spread of 90 basis points (bps) over US Treasuries. The certificates have a maturity of 27 February 2029.

Prior to this issuance SNB last accessed the international market under its previous name National Commercial Bank (NCB) through a 5-year Tier 1 US$1.25 billion Perpetual Mudaraba Sukuk offering in January 2021, which was priced at a final profit rate of 3.50% per, after initial price guidance was set at 4.125%.

Similarly, in September 2022, SNB issued a similar 5-year Perpetual Saudi-Riyal denominated Additional Tier 1 SAR3.3 billion Sukuk issuance which was price at a profit rate of 5% per annum.

For this latest offering, Saudi National Bank, mandated a consortium of banks led by Standard Chartered Bank, HSBC, Dubai Islamic Bank, Emirates NBD Capital, Goldman Sachs International, Mizuho, and SNB Capital to act as joint lead managers and bookrunners to the transaction and to organize a series of fixed income investor meetings with accounts in the UK, Europe, Offshore US, the GCC, MENA region and Asia. HSBC also acted as sole ESG Agent according to the offer circular.

SNB had given an initial price guidance at a spread around 120bps over U.S. Treasuries for a 5-year RegS Sustainability senior unsecured Sukuk issuance. Due to robust investor demand, the spread tightened considerably to finish at 90bps over US Treasuries.

According to SNB, the proceeds from this latest US$850 million Sustainability Sukuk issuance will be diverted towards financing general corporate purposes and to fulfil the bank’s financial and strategic objectives including in the ESG space.

The Sukuk certificates were admitted to be listed and traded on the London Stock Exchange’s International Securities Market in mid-March 2024.

Saudi National Bank in February 2024 announced Net Profit before Zakat and Income Tax totalling SAR22,773 million for FY 2023 – up 7.03% on the SAR21,277 million total in FY 2022. Similarly, net profit increased by 7.69% from SAR18,581 million in 2022 to SAR20,010 million in 2023.

Total Comprehensive Income increased by 86.61% from SAR9,3921 million in 2022 to SAR17,526 million in 2023. Total assets similarly grew by 9.69% to SAR1,037,081 million in 2023 from SAR945,496 million in 2022.

SNB investments were up by 4.2% from SAR258,292 million in 2022 to SAR269,129 million in 2023; while financing increased by 10.31% to SAR601,527 million from SAR545,311 million in the same period. Clients’ deposits remained stable increasing year-on-year by 3.83% to SAR590,051 million in 2023 from SAR568,283 million in the previous year.

Share this post