Mubasher: The UAE’s Emirates NBD has priced a $1 billion Senior Unsecured Sustainable Sukuk for Saudi Arabia-based Al Rajhi Bank that was oversubscribed 3.75 times.

Emirates NBD was the joint lead manager and bookrunner for the five-year Sukuk, which was priced at a reoffer yield of 4.774% and attracted orders exceeding $3.75 billion in value, according to a press release.

The strong order book allowed Al Rajhi Bank to tighten the pricing by 40 basis points (bps) to five-year US Treasury + 110 bps from an initial price guidance of 150 bps.

Middle Eastern investors formed 49% of the allocation for the Sukuk which also witnessed strong demand from high-quality international investors.

The Sukuk was issued under the Saudi lender’s $4 billion Trust Certificates Program which was established in April 2022.

“The proceeds will be used to finance and refinance, in whole or in part, Eligible Sustainable Projects, as set out in the Al Rajhi Bank’s Sustainable Finance Framework,” according to the press release.

It is worth noting that the issue is considered the first debt capital market transaction by a financial institution in the Middle East, Central and Eastern Europe, and Africa after the witnessed volatility in the global banking sector.

Managing Director and CEO of Al Rajhi Bank, Waleed Almogbel, said: “The success of this debut Sukuk issuance in these turbulent times reflects the confidence of investors in Al Rajhi Bank and the Kingdom’s solid foundations.”

Almogbel added: “We also look forward to publishing our annual Allocation and Impact report which will allow investors to further understand the environmental and social benefits this Sukuk transaction will create.”

Mohammad Al Bastaki, CEO of Emirates NBD Capital, said: “We are pleased to have led the successful closing of Al Rajhi Bank’s debut sustainable Sukuk amid a volatile market environment.”

Al Bastaki added: “Emirates NBD remains committed to taking the lead in providing a dynamic suite of sustainable financing solutions amid increasing demand from regional and global clients.”

In December 2022, Emirates NBD announced the launch of the first non-Saudi bank branch in Makkah, which marked a step in a planned expansion of 20 branches throughout Saudi Arabia that was unveiled in 2019.