Kuwait’s Warba Bank Forays into International Market with Latest Perpetual Additional Tier 1 Capital USD250mn Sukuk Mudaraba Offering to Boost its Capital Under Basel III Compliant Capital Requirements
Kuwait’s part-state-owned Warba Bank joined its fellow Saudi and Emirati institutions with Perpetual Additional Tier 1 (AT1) Capital Sukuk originations with a USD250mn AT1 Perpetual Sukuk Mudaraba offering with a 5-year non-call period to the international market on 13 May 2025.
Prior to this latest transaction, Warba Bank, which is currently in preliminary negotiations with Gulf Bank for a possible merger to form a new dedicated Islamic bank, issued a debut 5-Year Fixed Rate USD500mn Senior Unsecured RegS Sustainability Sukuk Wakalah/Murabaha in July 2024, maturing on 10 July 2029 – the first Sustainable Sukuk to be offered out of Kuwait.
The Sukuk certificates were issued by Warba Tier 1 Sukuk (3) Ltd as Trustee, on behalf of the Obligor, Warba Bank. This latest transaction was completed under the Bank’s US$2.0bn Trust Certificate Issuance Programme, following approval from the Central Bank of Kuwait, the Capital Markets Authority of Kuwait. This is Warba Bank’s third issuance under the current Programme.
Warba Bank mandated Emirates NBD Capital, HSBC and Standard Chartered Bank to act as joint global coordinators to the transaction, and together with Warba Bank, Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Emirates NBD Capital, HSBC, JP Morgan, Kamco Invest, MARKAZ, Warba Bank and Standard Chartered Bank to act as joint lead managers and bookrunners, and to arrange a series of investor calls and meetings in London, Europe, the Middle East, Asia and with Offshore US Accounts. The investor calls and meetings commenced on 12 May 2025.
The perpetual Sukuk certificates are perpetual but subject to early redemption on a Call Date or as otherwise specified in the base offering circular, the supplement base offering circular and the applicable final terms relating to the Sukuk. The First Call Date is set at 20 May 2030.
The issuance, which is based under a Mudaraba structure, was launched following final approval from the Central Bank of Kuwait and attracted strong demand from regional and international investors, which Warba Bank says reflected the positive response by investors to the Bank’s financial soundness and performance.
The Bank had set the initial price guidance at around a coupon rate of 6.5%. Due to the robust demand with the order book peaking at USD601.95mn – over 2.4x times oversubscribed – the indicative price for the perpetual trust certificates was tightened to a final profit rate/yield of 6.25% per annum payable semi-annually in arrears. This translates into a benchmark yield of 4.148% with a reoffer yield of 6.250%.
The proceeds from the issuance will be used to support the Bank’s Tier 1 Capital under the Basel III capital requirements and for general banking purposes.
Warba Bank is rated ‘A’ with a Stable Outlook by Fitch Ratings, and ‘Baa2’ with a Positive Outlook by Moody’s Investor Service, albeit the certificates are unrated. The Sukuk certificates were admitted to Nasdaq Dubai, and on the International Securities Market of the London Stock Exchange for listing and trading in May 2025.
The pricing for the July 2024 USD500mn Sustainable Sukuk Wakala/Murabaha offering in comparison was priced at a profit rate/yield of 5.351% per annum payable semi-annually in arrears.