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$533m raised in GIB's bond issue.

Byline: Arthur Macdonald

MANAMA: Gulf International Bank (GIB) has raised two billion Saudi riyals ($533 million) through a three times oversubscribed bond issue which was launched in Saudi Arabia.

Although the issue was originally targeted for 1.5bn riyals, the bank said the final issue size had been increased to 2bn riyals due to the substantial demand from investors.

The order book was closed on Sunday with orders totalling around 5bn riyals, representing an oversubscription of more than three times.

And the Bahrain-based bank, which is 97.2 per cent owned by the Saudi Monetary Authority and the Public Investment Fund of Saudi Arabia, looks set to raise further cash on the Saudi market.

GIB's Saudi Riyal bond issue is the first bond issue by a financial institution in Saudi Arabia this year.

It also represents the largest ever book for a fixed income riyal private placement in Saudi Arabia, or indeed by any financial institution issuance in the kingdom, GIB said.

GIB chief investment and treasury officer Antoine Dijkstra said that the bank planned more bond issues and is considering a benchmark size bond on the international market either later this year or the beginning of next year.

Government institutions, commercial banks, insurance firms and industrial companies were among the investors in the issue.

The allocation process of the three year notes was finalised yesterday, while the settlement will be completed on November 15.

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.

"We are delighted with the outcome of this bond issue," said GIB chief executive officer Dr Yahya A Alyahya.

"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, Dr Alyahya added.

Copyright 2009 Gulf Daily News

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Publication:Gulf Daily News (Manama, Bahrain)
Date:Nov 10, 2009
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