Saudi National Bank (SNB) has confirmed that its $1.25 billion issuance of dollar-denominated Tier 2 sukuk, offering a 6.00% profit rate, was heavily oversubscribed. According to Bloomberg, order books for the offering exceeded $2 billion, citing a person familiar with the transaction.
The bank is offering 6,250 sukuks at a par value of $200,000 each. Although the maturity period is set at 10 years, the instruments are callable after five years. The sukuks will be listed on the London Stock Exchange’s International Securities Market.
Strengthening Capital Base and Strategic Redeem Plans
Proceeds from the sukuk issuance will be partially used to reinforce SNB’s capital base. Bloomberg also noted that pricing may be finalized as early as Tuesday. In parallel, SNB announced it will redeem a SAR 4.2 billion ($1.12 billion) Tier 1 capital sukuk at face value on June 30—exactly five years after issuance.
In its filing with Tadawul, the bank stated: “The Sukuk was issued on 30 June 2020 for an aggregate value of SAR4,200,000,000 and in accordance with its terms and conditions, Saudi National Bank, as issuer, intends to call the Sukuk on 30 June 2025. Regulatory approval has already been obtained.” SNB confirmed that the redemption amount will include any accrued but unpaid periodic distributions due on that date.
Broader Market Context Remains Stable
While Saudi banks have increasingly turned to external debt instruments, global ratings agency S&P has stated that this trend does not pose major risks. Last month, the agency noted that “While the absolute numbers may appear significant, we expect Saudi banks’ net external debt position to remain at a manageable level of about 4.1 per cent of total lending by the end of 2028.”
Despite concerns stemming from lower oil prices and regional geopolitical tensions, S&P concluded that the banking sector’s fundamentals remain resilient.
