Gulf International Bank (GIB) has announced its debut of Saudi riyal bond issuance 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 roadshow. 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 Dr. Yahya A. Alyahya, GIB's chief executive officer, said “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 said “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.” The Saudi riyal bond issue reinforces GIB's pioneering role in the development of the region's capital markets. In 2002, GIB was the first Middle Eastern financial institution to issue senior debt, with a $325 million 5-year floating rate note. GIB's leadership role in the regional capital market was reaffirmed in April 2005 when the Bank finalized an $800 million syndicated 5-year term deposit facility. GIB was the first financial institution in the Middle East to issue a Tier 2 subordinated note ($400 million) in 2005.
