Kuwaiti bank completes $250m sukuk offering

19 March 2017

Proceeds from Islamic bonds will help the lender meet its capital adequacy ratios

Warba Bank has announced the closure of its $250m perpetual sukuk that will assist the Kuwait-listed sharia-compliant lender to increase its Tier 1 ratio to meet Central Bank of Kuwait regulatory requirements.

The Mudaraba Sukuk certificates were issued at a coupon rate of 6.50 per cent, and the issuance was oversubscribed by five times, with the order book reaching approximately $1.3bn, according to a Warba statement.

The sukuk issuance garnered strong investors’ interest from local and international investors. Investors from Kuwait subscribed 27 per cent of the issue, while 43 per cent of the notes were picked up by investors from wider Middle East and North African region. Europe and the United Kingdom accounted for 22 per cent of the subscription, and Asia completed the subscription with 8 per cent. 

Bahrain’s Bank ABC, Emirates NBD Capital, local Kamco Investment Company and KFH Capital Investment Company, UAE-based Noor Bank, and UK’s Standard Chartered Bank acted as joint lead managers and bookrunners on the transaction.

The funds raised through the Islamic bonds are aimed at “strengthening the bank’s capital adequacy ratio and assist in implementing our strategic corporate objective”, Shaheen Hamad Al-Ghanem, Warba bank chief executive said in the statement.

Warba bank’s sukuk came to market just ahead of the US Federal Reserve rate hike last week. It was a busy time for the GCC debt issuers with financial institutions, corporates and sovereigns all looking to raise funds to shore up capital before the changes in key rates by the Gulf central banks, which tradionally mimic the Federal Reserve moves due to the dollar-peg of regional currencies.

Bahrain-based Gulf International Bank, Dubai Islamic Bank and sovereign Wealth Fund Investment Corporation of Dubai are among those which have already tapped international debt capital markets this year. Oman, Bahrain and Kuwait are the sovereign issuers.

Saudi Arabia, the largest Middle Eastern Economy, is also poised to raise funds through a sovereign US dollar denominated sukuk. A Riyadh-based banking sources said that the Saudi issue is not likely to hit the markets before the third quarter of this year.

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