Gulf International Bank (GIB) announced on Thursday the successful closure of its Saudi riyal-denominated bond issue, which was launched in the Kingdom of Saudi Arabia (KSA) last week through the bank's Riyadh branch. The 5-year bond issue has been priced at 110 basis points over SIBOR (Saudi Interbank Offer Rate). The pricing was finalised at the lowest end of the original price indication of 110 to 120 basis points, demonstrating the overwhelming demand and success of the transaction. The issue was offered through a private placement to sophisticated investors. The objective of the bond issue is to further enhance and strengthen GIB's funding base and to extend the maturity profile of its liabilities. Through this and previous bond issues, GIB has successfully reduced its previous reliance on short term wholesale deposits, thereby more closely aligning the maturity profile of its assets and liabilities. A wide range of banks, trading and industrial companies, and governmental institutions subscribed for the bond issue. The allocation process was finalized on Thursday, while the settlement will be completed next week. Although the issue was originally targeted for SR3 billion, the final issue size was increased to SR3.5 billion to satisfy the substantial demand from investors. The order book was closed on Wednesday with orders totaling SR6.3 billion. Commenting on the success of the bond issue, Dr. Yahya A. Alyahya, GIB's chief executive officer, said “we are delighted with the outcome of this bond issue. The demand from a 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.” Last November, GIB successfully completed a SR2 billion 3- year bond issue in KSA. The issue was oversubscribed by more than three times. A wide group of government organizations, financial institutions, industrial companies and insurance firms subscribed to the bond issue. GIB has investment grade ratings from all three major international credit rating agencies. GIB was the first bank in the GCC to be awarded long-term investment grade credit ratings by all of the major international agencies. The Bank's current long-term foreign currency debt ratings are: Fitch: A, Moody's: A3, Standard & Poor's: BBB+. In addition, GIB is strongly capitalized with Total and Tier I capital adequacy ratios of 22.3 percent and 16.4 percent respectively at the end of 2009. These ratios significantly exceed regulatory minimum ratios and are also high by international comparison. GIB's Riyadh branch appointed GIB Financial Services (GIBFS) as the mandated lead arranger of the bond issue. Samba Capital & Investment Management Company, Riyad Capital, Calyon Saudi Fransi Limited, and GIBFS were mandated as joint book runners and joint lead managers of the bond transaction.
