Kuwait - The Commercial Bank of Kuwait (AlTijari), the issuer, and Kuwait Financial Centre “Markaz”, the lead manager and subscription agent, have announced the successful issuance of bonds with a nominal value of KWD 50 million ($161.748 million) with a tenure of 10 years, callable after five years.
The first tranche is considered part of the subordinated Tier 2 capital bonds programme, which was issued for the maximum value of KWD 100 million, and is the first issuance of its kind denominated in Kuwaiti dinar.
This issuance was executed through a private placement to qualified investors, where the bonds were fully subscribed, reflecting the investors’ trust in the quality of the issuance, enhancing the position of the Commercial Bank of Kuwait and highlighting the competence of the lead manager. This deal also marks the first bond issuance for the Commercial Bank of Kuwait.
The bonds of the first tranche of the programme offer rewarding returns for holders, as they were issued at a floating interest rate of 3.0% above the discount rate set by the Central Bank of Kuwait, with the minimum annual interest rate standing at 5.0%, per annum, payable semi-annually.
The bank will use the proceeds from the bond issuance to increase their Tier 2 capital, enhancing the bank’s capital adequacy ratio, in compliance with the Basel III framework. The proceeds will also support the its future expansion plans.
Moreover, the unsecured subordinated Tier 2 compliant bond issuance was rated BBB by Capital Intelligence, reflecting the bank’s solid capital base, which enjoys a high first-tier capital ratio and a high total capital adequacy ratio.
Other supporting factors include high quality assets and maintaining its non-performing loan ratio at zero for five consecutive years as of the end of 2022 and the first quarter of 2023, in addition to high rates of non-performing loan reserves. The bank also boasts a strong profit rate with the highest average of return on assets compared to similar banks, in addition to a high liquidity rate and a strong financing base.
Commenting on this announcement, Commercial Bank of Kuwait’s CEO, Elham Mahfouz, said: “The success of the bond issuance will directly contribute to the enhancement of the bank’s capital adequacy, while supporting future growth plans. The timely success of this deal is attributed to the clear operational framework of the bank, supported by the professional expertise of the lead manager and subscription agent, and the positive and impactful interaction with the regulatory authorities, namely the Central Bank of Kuwait and the Capital Markets Authority.”
General Manager-Treasury and Investment Division at the Commercial Bank of Kuwait, Hussain Al Aryan, said: “As the second-oldest established Kuwaiti bank, the success of this issuance further reinforces the bank’s positioning, from a credit and credibility perspective. It is also a testament to the strong positioning of Kuwait’s capital market, as an attractive investment destination that offers high return opportunities for both issuers and investors alike. This collaborative partnership with the Kuwait Financial Centre “Markaz” resulted in the efficient completion of the bond issuance, playing a pivotal role in the overall success of the operation”.
Markaz’s CEO, Ali H Khalil, said: “We are proud that we have partnered with the Commercial Bank of Kuwait to drive the successful issuance of the first tranche under the Bank’s subordinated tier 2 bonds program. As the lead manager and subscription agent, we are pleased to have fulfilled our role, and solidified our position as a top player in the investment banking sector. The prominent traction and strong demand of investors on this issuance stem from the stable performance and growth strategy pursued by the Commercial Bank of Kuwait, and its strong credit rating, in addition to our professional capabilities as the lead manager.”
Rasha Othman, Executive Vice President, Investment Banking (Capital Markets) at Markaz, said: “We are pleased with the successful completion of this deal, which was widely received by investors, driven by the strong reputation the Commercial Bank of Kuwait enjoys. This operation represents a significant addition to our track record, as Markaz played the key role in orchestrating the first convertible bonds into shares, denominated in the Kuwaiti dinar, as well as the first BOT- Backed bonds in Kuwait, and the first high-yield bonds, denominated in Kuwaiti dinar, in addition to the first Sukuk issuance for a Kuwaiti company.”
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