Riyad Bank's Tier 1 sukuk draws SAR13.6bn and is upsized to SAR10bn

Riyad Bank closed the public offering of its Saudi-riyal Additional Tier 1 capital sukuk with total subscriptions of SAR13.6bn against an original SAR5bn target, roughly 2.7 times covered, and doubled the issuance to SAR10bn in response. The certificates are perpetual, offered at a 6.5% profit rate, issued under the bank's SAR10bn Additional Tier 1 Capital Sukuk Programme and rated A- by Fitch. Additional Tier 1 is the most loss-absorbing layer of a bank's capital stack, the tranche investors are supposed to be most cautious about; that it cleared at this size, in riyals, at a domestic public subscription rather than an offshore private placement, says something specific. Shariah-compliant bank capital is no longer a specialist instrument bought by a handful of dedicated funds. It is deep enough that a bank can raise regulatory capital at home, from its own market, and choose to take twice what it asked for. The wider lesson for institution-builders is that the interesting milestone is not the landmark first issue but the day the instrument becomes ordinary enough to upsize on demand.

This is a QeRN summary by Ahmed Qerni. Read the original at Argaam: https://www.argaam.com/en/article/articledetail/id/1927680.