DUBAI: United Arab Emirates bank Mashreq sold $500 million in Tier 2 bonds on Thursday, a bank document showed, after a Saudi lender brought the region back to the international debt markets the previous day.

The bonds, which have a maturity of 10-1/4 years and are non-callable for 5-1/4 years, were sold at 7.95%, tightened from initial guidance of about 8.25% after drawing more than $1.4 billion of demand.

The debt sale follows a $700 million bond deal by Banque Saudi Fransi on Wednesday, the first public dollar debt offering in nearly a month out of the oil-rich Gulf, where debt issuance has plummeted this year amid market volatility and as the region rides high on oil prices.

They were the first Tier 2 bonds out of the UAE in nearly a decade and the first UAE bonds to meet Basel III international regulatory standards, a source with knowledge of the deal said.

Tier 2 bonds rank below senior debt but above subordinated Tier 1 bonds.

Barclays was sole structuring adviser, as well as joint bookrunner alongside Abu Dhabi Commercial Bank, Emirates NBD Capital, First Abu Dhabi Bank, Mashreq and Mizuho.

Mashreq last tapped international debt markets in July, when it raised $300 million in Tier 1 bonds that attracted less demand than expected. (Reporting by Yousef Saba; Editing by Mark Potter and David Goodman)