GIB plans Saudi riyal bonds.

Gulf International Bank (GIB) has announced plans to issue its debut Saudi Riyal bond through its Riyadh branch.

The bank has mandated GIB Financial Services and HSBC as joint lead arrangers and book runners for the bond transaction.

The transaction is expected to be launched subject to market conditions following an investor road show, the bank said.

The bonds will be offered only to institutional/sophisticated investors in Saudi Arabia through a private placement.

Issues related to pricing, size, and maturity of the bond will be determined through a book-building and price discovery process, similar to the book-building process for international bonds, said Dr Yahya A Alyahya, GIB's chief executive officer. "This is a groundbreaking transaction, representing the bank's first bond issue in Saudi Riyals.

The bond issue will further enhance the bank's funding base and extend the maturity profile of its liabilities." He explained that "the timing of the bond issue is important, as a change in financial regulations is anticipated in the near future in light of the recent global credit crunch. We believe that the planned new regulations will require banks to fund medium and longer term assets with longer tenor liabilities." GIB is a leading merchant bank in the Middle East with its principal focus on the GCC states. Its primary shareholder is the Public Investment Fund of Saudi Arabia.

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