Mashreq, a leading financial institution, has successfully priced a $500 million additional tier 1 bond offering with a coupon of 7.125 per cent per annum, marking its return to the debt capital markets since its last issuance in 2022. This transaction achieved the largest price tightening by any UAE bank for an additional tier 1 issuance in the last five years.
Following a well-attended global investor call and intensive marketing efforts, including a physical roadshow in London, Mashreq opened the order books with initial price thoughts (IPTs) of the high seven per cent area and a transaction size of $500 million. Strong demand early in the process led to an update of the book to nearly $1 billion, indicating significant momentum and demand from international and regional investors. Mashreq was then able to release guidance over 50 basis points inside of IPTs, reflecting the strong investor interest.
Despite the strong move, the order book remained firm with minimal drops from both regional and international accounts. This allowed Mashreq to launch the transaction, setting the yield at 7.125 per cent and pricing the Perpetual Non-Callable 5.5-year additional tier 1 bond offering at a reset margin of +270.5bps. This marks the tightest ever margin for Mashreq for a subordinated additional tier 1 or Tier 2 capital issuance, while also registering the lowest coupon for any UAE bank’s additional tier 1 offering in the last three years.
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Ahmed Abdelaal, Group Chief Executive Officer of Mashreq, expressed satisfaction with the robust investor engagement and support for the transaction, particularly amidst a volatile market. He highlighted that the oversubscription reflects investor confidence in Mashreq’s growth plans for 2024 and beyond.
Chairman Abdul Aziz Al Ghurair also congratulated the team on the success of Mashreq’s most lucrative capital notes issuance.
The transaction witnessed strong distribution across international and regional investors, reaffirming the investor community’s trust in Mashreq’s credit. The Middle East received the majority of the allocation, followed by Europe (including the United Kingdom), with the balance divided between Asian markets and offshore US interest. Real money demand from private banks and high-quality asset managers secured 90 per cent of the allocations, with the remainder taken by bank treasury divisions and hedge funds.
The bookrunners for the issuance included Abu Dhabi Commercial Bank, Al Ahli Bank of Kuwait (DIFC Branch), BofA Securities, Citi, Emirates NBD Capital, First Abu Dhabi Bank, Kamco Investment Company, Mashreq, and Mizuho.
Mashreq holds ratings of A by Fitch, A3 by Moody’s, and A by S&P, all with a stable outlook.
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