QIB Returns to the International Financial Market in September 2024 with Benchmark Senior Unsecured RegS US$750mn Sustainable Sukuk Wakala/Murabaha Offering
Qatar Islamic Bank (QIB), the largest and oldest Islamic Bank in Qatar, returned to the international financial market on 10 September 2024, successfully issuing a benchmark senior unsecured RegS USD750mn Sukuk Wakala/Murabaha with a tenor of 5 years, maturing in September 2029.
The Sukuk certificates were issued by Trustee QIB Sukuk Limited, a special purpose vehicle incorporated in the Cayman Islands, on behalf of the Obligor (QIB), under its USD5bn Trust Certificates Issuance Programme, dated 11 July 2024 but supplemented on 3 September 2024, and arranged by HSBC Bank.
The Sukuk certificates, rated ‘A1’ by Moody’s Investor Service and ‘A’ by Fitch Ratings in line with QIB’s institutional credit ratings, were priced at a profit rate of 4.485% per annum paid semi-annually. “The profit rate,” said QIB in a disclosure, “was equivalent to a credit spread of 100 basis points (bps) over the US Treasury rate, which was 15bps inside QIB’s fair value and lower than secondary market spreads of all Qatari banks, reflecting the positive perception of international investors about the overall strength of Qatar’s economy and QIB’s credit quality.” Moreover, QIB’s profit rate was the lowest achieved by a GCC bank for a senior unsecured 5-year issuance in 2024.
QIB announced its intention to issue a Sukuk in early September. The Bank had mandated Bank ABC, Dukhan Bank, Emirates NBD Capital, HSBC, KFH Capital, Mashreq, Mizuho, QNB Capital, Q Invest, Standard Chartered Bank and The Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the Islamic Development Bank (IsDB) Group, to act as Joint Lead Managers and Bookrunners to the transaction and to arrange a series of calls with European, Mena Region, Asian and Offshore US fund managers.
According to QIB, initial investor feedback was encouraging, and the order book quickly grew to peak at USD2.2bn, representing an oversubscription rate of 3 times, which the Bank stressed was “one of the highest levels of demand seen for Sukuk issuances.”
The robust order book enabled QIB to tighten the pricing by 30bps in one iteration to 100bps over the US Treasuries rate from “Initial Price Thoughts” of 130bps. Investor diversity was broad and comprised banks, private banks, fund managers and agencies from all over the world.
Mr. Bassel Gamal, QIB’s Group Chief Executive Officer, commented “QIB is pleased with its successful return to the international capital markets. Our deal showcases the large and diversified investor following that the State of Qatar enjoys and highlights the confidence placed by international and regional investors in the bank. We are proud of the exceptional investor demand received and confidence placed in our business.”
The proceeds from the Sukuk, according to the Base Prospectus, will be used “for general corporate purposes, and an amount equivalent to the net proceeds will be applied to finance and/or refinance, in whole or in part, a portfolio of eligible sustainable projects within eligible categories as set out in the Bank’s Sustainable Finance Framework.”
Prior to this latest transaction, QIB last issued a USD500mn benchmark 5-year Sukuk in November 2023 priced at a profit rate of 5.581% per annum payable semi-annually in arrears, and equivalent to a spread of 115bps over the benchmark US Treasury rate. QIB effectively reopened the international market for other Qatari entities, being the first bank issuer from Qatar to access the USD market via a public issue since July 2021. That transaction similarly was met with strong demand, culminating in an orderbook size more than USD3.3bn from more than 160 regional and international investors. The oversubscription rate of 6.6 times represents the highest orderbook for a senior Sukuk since June 2020.
This latest QIB Sukuk Certificates were admitted to trading on the London Stock Exchange’s International Securities Market and was listed on the London Stock Exchange’s Sustainable Bond Market on 9 September 2024.