National Bank of Kuwait (NBK) has successfully priced an $800 million Additional Tier 1 bond issuance, marking its largest issuance in this capital tier. This issuance follows strong investor demand and represents a notable return to the GCC AT1 market after a brief pause following numerous issuances in May.
The bond attracted substantial interest, with subscription orders reaching $2.2 billion, or 2.75 times the issued amount. This indicates robust interest from a diverse group of global investors and financial institutions, particularly private banks which were key anchors during the orderbook building process. The response highlights international confidence in NBK’s credit profile and Kuwait’s investment appeal.
MENA-based investors accounted for 47% of total allocations, followed by those from the UK (19%), the United States (18%), Europe (13%), and Asia (3%). By investor type, asset managers and investment funds made up 48%, while banks and private banking clients constituted 44%. Sovereign entities, insurance firms, and pension funds made up the remaining 8%.
The strong demand enabled NBK to achieve favorable pricing for the issuance, with a final yield set at 6.375%, representing a tightening of 50 basis points from initial price thoughts of 6.875% (equivalent to UST+240.3bps). The investment-grade credit rating of Baa3 from Moody’s further increased its appeal among international private banking platforms and global asset managers.
Global Coordinators for the issuance included Citigroup, J.P. Morgan, HSBC, and Standard Chartered. Joint Lead Managers were Citigroup, J.P. Morgan, HSBC, Standard Chartered, First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank, KAMCO Investment Company, and National Bank of Kuwait.
The bonds will be listed on the London Stock Exchange and are expected to enhance NBK’s capital adequacy ratios. This new issuance was conducted alongside NBK’s liability management exercise that offered holders of the bank’s existing $750 million Additional Tier 1 securities issued on November 27, 2019, an option to roll their positions into this new offering.
