In the Largest Bond Issue for a Financial Institution in Saudi Arabia, GIB Raises SAR 2 Billion

9 November 2009

Gulf International Bank (GIB) announced today the successful closure of its Saudi Riyal-denominated bond issue, which was launched in the Kingdom of Saudi Arabia last week through the Bank’s Riyadh branch.

Although the issue was originally targeted for SAR 1.5 billion, the Bank said the final issue size had been increased to SAR 2 billion due to the substantial demand from investors. The order book was closed on Sunday, 8th November with orders totalling around SAR 5 billion, representing an oversubscription of more than three times.

GIB’s Saudi Riyal bond issue is the first bond issue by a financial institution in the Kingdom of Saudi Arabia in 2009. It also represents the largest ever book for a fixed income SAR private placement in the Kingdom, or indeed by any financial institution issuance in the Kingdom. The issue was privately placed with institutional investors in KSA. Government institutions, commercial banks, insurance firms and industrial companies are among the investors.

The allocation process of the 3-year notes was finalised today, while the settlement will be completed next Sunday, 15th November 2009.

The bonds have been priced at 127.5 basis points over SIBOR (Saudi interbank offered rate). The pricing was finalised below the original price indication of 130 to 140 basis points, again demonstrating the overwhelming demand and success of the transaction. GIB Financial Services and HSBC had been mandated as joint lead arrangers and book runners for the bond transaction, the first for GIB in Saudi Riyals.

Commenting on the success of the bond issue, Dr. Yahya A. Alyahya, GIB’s Chief Executive Officer, said “We are delighted with the outcome of this bond issue. The demand from a very diverse group of highly respected institutional investors reflects not only the market’s strong confidence in GIB, but also manifests the dynamism of Saudi Arabia’s economy and growing capital markets.”

He added that the timing of this bond issue was important, as it comes after a challenging year in the global and regional financial markets. The success of the issue will boost confidence in the market and provide opportunities in the future for more capital market transactions that are designed to further enhance the funding base and extend the maturity profiles of financial institutions.

“I would like to take this opportunity to thank all governmental organizations, companies and financial institutions that have contributed to the success of the bond issue. I also thank GIB Financial Services and HSBC for their diligent efforts as joint lead managers and book runners,” Said Dr. Alyahya.