The National Bank of Ras Al-Khaimah (RAKBANK) successfully priced a five year $500 million bond issuance. The bond was issued at 99.275 per cent and will pay an annual coupon of 3.250 per cent, equivalent to 160 bps over five year USD Mid Swaps.
The issuance marks RAKBANK's return to the bond markets after a hiatus of almost ten years and is the first non-government issuance from the Emirate of Ras Al-Khaimah.
The strong investor demand received for the issuance, as evidenced by an orderbook of $1.6 billion, representing an oversubscription of over 3.2 times, allowed RAKBANK to price at 160bps over USD Mid-Swaps, which was 10bps inside the initial price guidance of 170bps over USD Mid-Swaps. The investor base captured was well diversified with banks comprising 47 per cent of the orderbook, followed by fund managers (36 per cent), private banks (12 per cent) and insurance companies (five per cent).
RAKBANK Chief Executive Officer, Peter England, said: "We are very pleased with the success of the transaction, which highlights the confidence placed by investors in the Bank. It was important for us to take advantage of the current low-cost financing opportunities in the bond market to proactively tackle the duration mismatch that arises from funding longer tenure loans using short-term deposits, a practice common in the UAE. Furthermore, the issuance allows us to diversify our sources of funding and access a wider base of investors."
Standard Chartered Bank and National Bank of Abu Dhabi acted as Joint Arrangers and Joint Lead Managers, with Commercial Bank International and Union National Bank as Co-Managers on this transaction.