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Saudi bank NCB prices $1.33bn sukuk

Dubai, February 19, 2014

National Commercial Bank (NCB), Saudi Arabia's largest lender, has completed a 5 billion-riyal ($1.3 billion) Islamic bond issue, two banking sources said on Wednesday.

The transaction is the largest of its kind in the kingdom and continues the trend of Saudi banks issuing debt instruments to boost capital reserves after a sustained period of high lending growth.

A spokesman for NCB could not immediately be reached for comment.

The bank had been aiming to raise 4 billion riyals but the size of the sukuk was increased because of strong demand from investors, one of the sources said, speaking on condition of anonymity as the information wasn't public.

NCB's chairman, Mansour Al-Maiman, was quoted in October as saying the bank was planning to issue a sukuk worth up to 4 billion riyals.

NCB's sukuk will enhance its Tier 2 - or supplementary - capital and will have a 10-year lifespan with an option of the bank redeeming the instrument after five years.

The Islamic bond was priced at 110 basis points over the six-month Saudi interbank offered rate (Saibor), the first source said.

Last month NCB commissioned its own investment banking arm, NCB Capital, as well as that of Gulf International Bank and the Saudi Arabian units of HSBC and JP Morgan to arrange the transaction.

It is the latest Saudi bank to issue sukuks. Riyad Bank completed a 4 billion-riyal issue in November, and Saudi Hollandi Bank priced a 2.5 billion-riyal offering in December. - Reuters




Tags: Saudi Arabia | sukuk | NCB |

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