Kuwait: Deal of the Year
Boubyan Bank in May 2016 successfully issued a US$250 million Sukuk facility to enhance its capital reserves. The maiden offering was the first Basel III-compliant Tier 1 Sukuk issuance emanating out of Kuwait. Speaking to Saleh Al Ateeqi, CEO of Boubyan Capital, NURUL ABD HALIM has the exclusive.
The deal was the first fully Basel III-compliant Tier 1 Sukuk issuance from a Kuwaiti bank, and also the first out of Kuwait since 2007. Hailed as a landmark transaction in both the Kuwaiti Islamic finance industry and the global Islamic finance industry, Saleh enthused: “We are seeing increasing activity in the global Islamic finance industry and expect more issuances in the coming period.”
The initial price thought was announced in the “very low 7% area” for the debut US dollar paper; however, the orderbook quickly gained momentum during marketing in London, allowing the bank to release guidance in the 6.88% area. On the back of a robust orderbook, Boubyan was able to release the final guidance at 6.75% and saw the transaction oversubscribed by more than five times with demand reaching US$1.4 billion from 94 accounts. The large bulk of the issuance size was grabbed by Kuwaiti investors (35%) followed by the rest of the MENA region (34%), Asia (18%) and Europe (13%).
Commenting on the challenges, Saleh opined: “The transaction ran smoothly with commendable efforts from all parties involved … [who] took tremendous efforts to ensure the success given the uniqueness of the transaction.” While the deal — which is not part of any program or series — was unrated, the bank was rated at ‘A+’ and ‘Baa1’ with a stable outlook by Fitch Ratings and Moody’s Investor Services respectively.
After considering all structures for this issuance, the bank settled on the Mudarabah structure, which is in line with other Tier 1 issuances in the region. Proceeds from the facility will be used to support Boubyan’s capital base.
Summary of terms & conditions |
|
Issuer |
|
Obligor |
|
Size of issue |
US$250 million |
Mode of issue |
Public offering |
Purpose |
To support Boubyan Bank’s capital base |
Tenor |
Perpetual non-call five years |
Issuance price |
100% |
Profit rate |
6.75% annually |
Payment |
Semi-annual basis |
Currency |
US dollars |
Global coordinator(s) |
Boubyan Capital Investment Company, HSBC and Standard Chartered Bank |
Lead manager(s) |
Boubyan Capital Investment Company, Dubai Islamic Bank (DIB), Emirates NBD, HSBC, KFH Capital Investment Company, National Bank of Kuwait and Standard Chartered Bank |
Co-manager(s) |
|
Governing law |
English and Kuwaiti laws |
Legal advisor(s)/counsel |
Issuer: Denton & Co and Al-Tamimi & Company Banks: Allen & Overy and Meysan Partners |
Listing |
|
Underlying assets |
Net proceeds of the certificates will be paid by the trustee to the bank as contribution of the Mudarabah capital pursuant to the terms of the Mudarabah agreement. |
Rating |
‘A+’ by Fitch and ‘Baa1’ by Moody’s, each with a stable outlook |
Shariah advisor(s) |
Shariah committees of Boubyan Bank, DIB, HSBC, KFH Capital, Standard Chartered Bank |
Structure |
|
Tradability |
Tradable |
Investor breakdown |
Kuwait: 35% MENA (Ex. Kuwait): 34% Asia: 18% Europe:13% |
Face value/minimum investment |
US$200,000 and integral multiples of US$1,000 in excess thereof |
Besides being active in the corporate banking segment, Boubyan also participates in syndicated deals in the local market with varying roles (mandated lead arranger, paying agent, joint arranger, etc) in major Islamic syndicated facilities and also in the debt capital market.