Kuwait: December 01, 2019
Lowest coupon ever out of the region for a Tier 1 Capital Security at 4.50% amongst both conventional and Islamic issuers
Kuwait City, 01 December 2019: Watani Investment Co. K.S.C.C. (“NBK Capital”) acted as Global Coordinator and Joint Lead Manager for the National Bank of Kuwait S.A.K.P’s (“NBK” or the “Bank”) US$ 750 million Regulation S / 144A Perpetual Non-Call 6-year Tier 1 Capital Securities (the “Capital Securities”) issuance.
The Capital Securities offer semi-annual coupon payments set at 4.50% per annum and have a first reset date on 27 November 2025, before which the securities can be called at any point 3 months prior or on any interest payment date thereafter.
The issuance represents the first of its kind to be offered in both Regulation S and 144A formats from the GCC, which allowed for the marketing of the issuance globally including on-shore in the United States.
A diversity of global investors participated in the issuance, with the order book peaking at US$ 2.3 billion (3.1x oversubscription) from more than 160 investors and a final book of US$ 1.9 billion (2.5x oversubsrciption). The robust demand for the issuance allowed NBK to price the lowest coupon ever for a GCC Tier 1 capital security at 4.50% (6 Year US Treasury rate + 283.2bps).
The transaction achieved a globally diverse order book lead by US investors at 33%, followed by UK investors at 27%, Asian-Pacific investors accounted for 20%, while European and MENA investors each made up 10% of the final order book. Fund managers dominated the placement making up 76% of the final order book, followed by Insurance companies and Banks/Private Banks at 12% and 10% respectively.
Mr. Faisal Al Hamad, NBK Capital’s Chief Executive Officer stated: “We are honored to once again guide NBK towards achieving yet another landmark transaction that has shattered the bounds of the GCC’s evolving debt capital markets. NBK’s ability to shore up capital from around the world is a testament to the Bank’s global reach and leading regional position”
Mr. Rani Selwanes, NBK Capital’s Managing Director and Head of Investment Banking added: “NBK has continuously looked to challenge the market and with this transaction the Bank has elevated yet again to a global level and surpassed expectations, by achieving the most diverse global order book ever for an Emerging Market Tier 1 issuance and setting a record-breaking pricing level out of the GCC.”
The issuance constitutes direct, unsecured, unconditional, and subordinated payment obligations of the Issuer and NBK, The issuance obtained a “Baa3” rating by Moody’s, one of three other issuances to obtain an investment grade rating from the GCC.
The proceeds from the issue of Capital Securities will be used by NBK to further enhance its Basel III Compliant Tier 1 Capital while also supporting its general corporate purposes. NBK is one of the leading banks in Kuwait and the largest by total assets, customer deposits and customer loans and advances. The Bank continues to maintain a rating of Aa3 by Moody’s, A+ by S&P and AA- by Fitch (all stable).
NBK Capital, Citi, J.P. Morgan and Standard Chartered acted as Global Coordinators and Joint Lead Managers, while HSBC and UBS acted as Joint Lead Managers on the transaction.
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