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Saudi British Bank could issue dollar bond this month - sources
May 2, 2017 / 3:23 PM / 7 months ago

Saudi British Bank could issue dollar bond this month - sources

RIYADH, May 2 (Reuters) - HSBC-controlled Saudi British Bank (SABB) is in discussions with lenders over a U.S. dollar-denominated bond issue that could come as early as this month, banking sources familiar with the matter said on Tuesday.

The bank has appointed HSBC, which has a 40 percent stake in the lender, as financial adviser for the establishment of a debt programme but no banks have been formally named for the potential issue, said one source close to the situation.

An HSBC spokeswoman declined to comment.

If the sale goes ahead, SABB would be the first Saudi bank to raise funds internationally since the kingdom raised $17.5 billion with its first international bond last year.

That issue was seen paving the way for Saudi companies to follow suit. Banks in particular were expected to tap international markets soon after the jumbo sovereign issue, but improved liquidity in the banking system has slowed their plans.

Nevertheless, continued regulatory pressures and higher non-performing loan ratios caused by low oil prices are expected to drive Saudi banks and lenders in the Gulf more generally to turn to debt financing, bankers said.

It is possible that SABB’s debt sale, which is likely to be a subordinated bond, could be delayed by the lender’s merger talks with Alawwal Bank, which were announced at the end of April, said the sources.

SABB is the kingdom’s sixth largest bank by assets. A merger with Alawwal Bank would create an entity with assets worth nearly $80 billion.

SABB said at the end of March it planned to establish a sukuk programme of up to $2 billion which could include local currency and dollar-denominated Islamic bonds. It said it would establish the programme in the second quarter. (Editing by David Clarke)

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