GIB to Issue Saudi Riyal-Denominated Bonds in KSA

2 November 2009

Gulf International Bank (GIB) has announced its debut Saudi Riyal bond issuance through its Riyadh branch. The Bank has mandated GIB Financial Services and HSBC as joint lead arrangers and book runners for the bond transaction.

This will be GIB’s first Saudi Riyal bond issue. The transaction is expected to be launched subject to market conditions following an investor road show.

The bonds will be offered only to institutional/sophisticated investors in Saudi Arabia through a private placement. Issues related to pricing, size, and maturity of the bond will be determined through a book-building and price discovery process, similar to the book-building process for international bonds

Dr. Yahya A. Alyahya, GIB’s Chief Executive Officer, said “this is a groundbreaking transaction, representing the Bank’s first bond issue in Saudi Riyals. The bond issue will further enhance the Bank’s funding base and extend the maturity profile of its liabilities.”

He explained that “the timing of the bond issue is important, as a change in financial regulations is anticipated in the near future in light of the recent global credit crunch. We believe that the planned new regulations will require banks to fund medium and longer term assets with longer tenor liabilities.”

GIB is a leading merchant bank in the Middle East with its principal focus on the Gulf Cooperation Council states. Its primary shareholder is the Public Investment Fund of Saudi Arabia. The Bank has branches in Riyadh and Jeddah and is planning to open a third branch in the Eastern Province in early 2010. GIB provides client-led, innovative financial products and services to a wide customer base in the region, including investment banking, asset management, project and structured finance and Islamic banking.

This Saudi Riyal bond issue reinforces GIB’s pioneering role in the development of the region’s capital markets.  In 2002, GIB was the first Middle Eastern financial institution to issue senior debt, with a US$ 325 million 5-year floating rate note. GIB’s leadership role in the regional capital market was reaffirmed in April 2005 when the Bank finalised an US$ 800 million syndicated 5-year term deposit facility.  This was the largest syndicated term deposit facility raised by a regional financial institution. GIB was also the first financial institution in the Middle East to issue a Tier 2 subordinated note (US$ 400 million) in 2005.

GIB has investment grade ratings from all three major international credit rating agencies. GIB was the first bank in the GCC to be awarded long-term investment grade credit ratings by all of the major international agencies. The Bank’s current long-term foreign currency debt ratings are: Fitch: A, Moody’s: A3, Standard & Poor’s: BBB+.

In addition, GIB is strongly capitalized with Total and Tier I capital adequacy ratios of 20.0% and 14.7% respectively at the end of June 2009. These ratios significantly exceed regulatory minimum ratios and are also high by international comparison.