Burgan Bank, the second largest conventional bank by assets size in Kuwait, has announced that it has successfully placed Perpetual Tier 1 Capital Securities worth $500 million in the international debt capital markets.
The securities comply with the Basel III regulatory framework that's adopted by the Central Bank of Kuwait, said the statement from Burgan.
The transaction came on the back of a comprehensive global roadshow, covering the key financial centres in London, Hong Kong, Singapore, Abu Dhabi and Dubai.
Following strongly positive feedback from the roadshow, the orderbook saw strong momentum from investors globally, which allowed the bank to ultimately place $500 million Perpetual Tier 1 Capital Securities at a yield of 5.750% (which translates to a margin of 400.7bps over the 5-year US Treasury Rate), it stated.
The transaction saw strong demand from a diverse investor base, which allowed for a balanced distribution. More specifically, the securities were allocated to investors across the Middle East (51%), Asia (22%), Europe (26%), and US Offshore accounts (1%), said the bank in its statement.
In addition, allocations to different types of accounts were also well balanced, with Banks (30%), Private Banks 26%, Fund Managers (37%), Pension Funds and Insurance Companies (3%) and Other Investors (4%) anchoring the orderbook, it added.
Chairman Majed Essa Al Ajeel said: "The success of this issuance is a testament to the strength of Kuwait's financial market and Burgan's credit story. We would like to extend our sincerest gratitude to the Central Bank of Kuwait and Kuwait's Capital Markets Authority for their diligence and professionalism throughout the transaction process."
According to the top Kuwaiti bank, the issuance was part of a wider financing exercise. More specifically, it was undertaken in conjunction with a tender buy-back offer on the bank's existing US$500 million Perpetual Tier 1 Capital Securities, after which Burgan accepted $230.2 million worth of securities for purchase at 100.85% of their nominal value, it stated.
The value of the Perpetual Tier 1 Capital Securities repurchased represented 46.04% of their overall outstanding amount. This liability management exercise which was undertaken in relation to the Bank's existing Perpetual Tier 1 Capital Securities is the first of its kind from the region.
Group CEO Masaud Hayat said: "The diverse and high quality orderbook, which was 4.4x oversubscribed reflects the confidence that regional and international investors have in the Bank's strategy, prudent financial management and prospects for growth and development."
HSBC Bank and JP Morgan Securities acted as Joint Global Coordinators and Joint Lead Managers along with Arab Banking Corporation, Citigroup Global Markets, Emirates NBD Capital, First Abu Dhabi Bank, Standard Chartered Bank and Watani Investment Company who also acted as Joint Lead Managers.
Burgan Bank CEO (Kuwait) Raed Al Haqhaq said: "The transaction demonstrates Burgan's on-going strategy to support the bank's balance sheet with long-term funding, and meet regulatory liquidity and capital requirements."
"The support provided by the bank's advisors was indispensable to the transaction's success," he added.-TradeArabia News Service
