SABB issues first ever EURO currency international bond by a Middle Eastern issuer

This is SABB's second FRN issue, and the first ever EURO currency denominated international bond issue by any Middle Eastern issuer. With this issuance, SABB has maintained its position as a pioneer for Saudi banks, having last year been the first in the Kingdom to set up an EMTN Programme.

Ahead of issuance a senior level delegation representing SABB undertook a roadshow in major financial centres in Europe. The response was very positive, attracting and diversifying the investor base to those investors whose natural currency was the EURO, in addition to other investors who continue to be attracted by SABB's strong credit fundamentals. SABB was able to achieve its strategic objective of regional investor diversification, with two-thirds of the deal placed in Europe and a further 16% placed in Asia, with the balance consisting of Middle Eastern institutions. This is the highest non-Middle Eastern investor distribution by any GCC financial institution, and the highest distribution into Europe. SABB successfully widened its European investor base, with orders coming in from France, Germany, Austria, Switzerland, Luxembourg, Cyprus, Malta and the UK, including a number of investors who had never previously purchased Middle Eastern bonds.

The key messages that were presented to investors were SABB's strong creditworthiness, excellent credit ratings ("A" by both, Standard & Poor's and Fitch), 40% ownership by the HSBC Group, and the 20% risk weighting that SABB, as a Saudi entity carries. The combination of these factors enabled the deal to be competitively priced to pay a coupon of 30bps, and at inside where the bank could have priced on direct US$ FRN issuance.

John Coverdale, Managing Director of SABB, said,

"We are delighted to have again led the market in capital markets innovation, with the first ever EURO denominated issuance out of the region by any issuer. SABB's success in this issuance is testimony to its credit fundamentals, forward-looking and proactive liquidity management, and a desire to constantly innovate. With its second issuance in as many years, SABB has demonstrated its intent to be an active player in the international debt capital markets, and looks forward to maintaining existing investor relationships and to fostering new ones."

The arranger of the Programme and sole lead manager of the bond issue is HSBC. Representing the lead manager, an official from HSBC said, "With this transaction HSBC has consolidated its leading position in GCC bond issuance, opening up a market sector which is expected to become increasingly accessed in the coming months." HSBC is the first bank to have lead managed Eurobonds out of each of the GCC countries.