Prime Highlights:
Riyad Bank has launched SR-denominated additional Tier 1 sukuk under its SR10 billion program.
The offering started on January 7, 2025, and will run through January 16, 2025.
A minimum subscription of SR250,000 is required for participation in the sukuk issuance.
Key Background:
Riyad Bank, one of Saudi Arabia’s largest financial institutions, has announced the launch of its SR-denominated additional Tier 1 sukuk under its SR10 billion ($2.66 billion) Additional Tier 1 Capital Sukuk Program. The offering, which began on January 7, 2025, is scheduled to run through January 16, 2025, and is being conducted via a private placement in the Kingdom.
The bank stated that the final terms and the total value of the sukuk issuance would be determined based on prevailing market conditions. The sukuk will carry a minimum subscription requirement of SR250,000. Sukuk, as a Shariah-compliant financial instrument, allows investors to gain partial ownership of an issuer’s assets until maturity.
Riyad Bank has appointed Riyad Capital as the sole lead manager for the sukuk issuance. The bank emphasized that any significant developments related to the offering will be communicated in due course. This issuance aligns with the growing trend of sukuk offerings in the Kingdom, which is expected to increase in 2025, as forecasted by Fitch Ratings in its October report. Fitch anticipates a rise in sukuk distributions, driven by a forecasted reduction in US Federal Reserve interest rates, with expectations that the rates will stand at 3.5 percent by 2025.
In December 2024, Fitch affirmed Riyad Bank’s long-term issuer default rating at A- with a stable outlook, citing strong support from the Saudi government as a key factor behind the rating. The A- rating indicates low default risk and reflects the bank’s robust ability to meet its financial obligations.
Additionally, Riyad Bank reported a 16 percent increase in net profit for the first nine months of 2024, reaching SR7.06 billion, compared to the same period in the previous year. As sukuk issuances continue to grow in the region, analysts predict that Saudi Arabia will account for the largest share of bond and sukuk maturities in the Gulf Cooperation Council (GCC) region from 2025 to 2029, with projected maturities reaching $168 billion.
