The region’s debt capital market is making a strong comeback after a muted three-week stretch in August.

While First Abu Dhabi Bank (FAB) issued the region’s first-ever Blue Bond by a financial institution on Thursday morning, Saudi-based Arab National Bank (ANB) is the latest to join the AT1 and Tier 2 issuance bandwagon, following similar deals from Saudi Awwal Bank (SAB) and Alinma Bank earlier this week.

FAB's HKD 390 million (USD 50 million) 5-year Blue Bond marked the first-ever Blue Bond issued by a financial institution in the Gulf countries.

The bond, issued via a private placement, was anchored by a 'Dark Green' investor, who was seeking specific blue labelled instrument.

On Thursday, ANB, the leading Saudi financial institution, rated A1 by Moody’s (Stable), A- by S&P (Stable) and A- by Fitch (Stable), mandated banks for a RegS US$ benchmark unrated Registered Perpetual non-call 5.5-year fixed rate resettable AT1sustainable sukuk offering.

Joint Lead Managers and Joint Bookrunners include: ANB Capital Company, Arqaam Capital, BofA Securities, Citigroup Global Markets, Crédit Agricole CIB, Deutsche Bank, HSBC Bank, Kamco Investment Company, SMBC Bank International and Standard Chartered Bank.

HSBC Bank and Standard Chartered Bank are the Joint Sustainability Structurer.

On Wednesday, Saudi Alinma Bank had priced a USD 500 million perpetual, non-callable for 5.5 years Additional Tier 1 (AT1) sustainable sukuk at par, with a 6.25% semi-annual coupon. Saudi Awwal Bank (SAB), rated A1 (Stable) by Moody’s and A– (Stable) by Fitch, launched a $1.25 billion Tier 2 green bond offering at T+220 basis points. The bond pays a semi-annual coupon of 5.947%.

Banque Saudi Fransi’s (BSF) Tier 2 offering was the first issuance to hit the market following a lull. The bank priced a USD 1 billion deal at T+200 basis points and will pay a semi-annual coupon of 5.761%.

"Saudi Arabia will take the lead when it comes to DCM issuances in the region. We will see more shorter tenor AT1 and AT2 issuances this year,” a DCM banker based in Dubai told Zawya. According to Fitch Ratings, GCC banks are likely to issue over $30 billion in US dollar debt this year. However, the market is still fragmented but evolving, with Saudi Arabia and the UAE among the most mature markets.

“In the first half of the year, Saudi Arabia has led bank issuances by a wide margin,” the DCM banker said. “Turkey saw a larger number of trades, but with lower volumes. The UAE has had a few deals, including ENBD and RAK Bank. This trend will continue and the GCC is expected to remain among the top emerging-market (EM) US dollar debt issuers in 2025 and 2026,” he added.

(Reporting by Seban Scaria; editing by Anoop Menon)

(seban.scaria@lseg.com)