Al Hilal sukuk oversubscribed at $6.3 billion

Al Hilal Bank (AHB), rated A1 by Moody's and A+ by Fitch, priced its highly successful debut $500 million Sukuk issued at par with 3.267 per cent semi-annual profit rate with a spread of 170 bps over the US dollar at 5-year mid swaps (MS).

AHB, Citigroup, HSBC, NBAD and Standard Chartered Bank acted as Joint-Lead Managers and Joint Bookrunners, with BIBD, Maybank IB, SIB and UNB acting as co-Managers.

Bookbuilding began on September 29, 2013 with the release of initial price thoughts at MS + 190bps area at Middle East open.

This ensured good momentum in the bookbuilding process, with the orderbook oversubscribed several times and topping $4.75 billion before price guidance was released. On October 1, 2013 London morning, a final price guidance of MS + 170bps was released to investors and the deal was priced at the final price guidance at 1:15pm London time.

Despite considerable volatility in the international market, AHB was able to take advantage of the resilience of the Sukuk market and the strong pent-up demand for quality issuers among Islamic investors to successfully price a transaction. The orderbook was more than 12 times oversubscribed – the highest oversubscription witnessed in any senior offering by a GCC bank.

A successful marketing strategy was undertaken by AHB’s senior management team starting September 22, 2013 involving a series of fixed-income investor meetings in the key financial centres of Abu Dhabi, Dubai, Singapore, Kuala Lumpur and London.

AHB’s credit story appealed to a high-quality investor base resulting in a well-diversified orderbook across geographies and investor types.

The geographical distribution of the issue was as follows: 37 per cent to the UAE, 21 per cent to the rest of the Middle East, 22 per cent to Asia, 17 per cent to Europe, and 3 per cent to US offshore investors. Banks subscribed to 48 per cent of the issue while the remaining distribution by investor type was Funds 31 per cent, Sovereign and Supra National Agencies 13 per cent, Private Banks 4 per cent and Insurance Funds 4 per cent.
 The Trust Certificates will be listed on the Irish Stock Exchange under AHB’s $2.5 billion Trust Certificate Programme.

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