Mashreq successfully priced a US$500mn Additional Tier 1 bond offering with a coupon of 7.125 percent per annum on Monday 3rd June 2024.
The transaction marked Mashreq’s successful return to the debt capital markets since their last issuance in 2022 and achieved the largest price tightening by any UAE bank for an Additional Tier 1 issuance in the last 5 years.
Following a well-attended global investor call and a couple of days of intensive marketing, including a physical roadshow in London, Mashreq decided to open the order books on Monday June 3rd 2024 with initial price thoughts (IPTs) of the high 7% area and for a transaction sized at US$500mn. Large demand early in the process allowed Mashreq to release a book update of >US$1bn, confirming significant momentum and demand from international and regional investors. Mashreq was then able to release guidance moving over 50bps inside of IPTs on the back of an orderbook exceeding US$2.1bn at that early stage of the process.
Despite the strong move, the orderbook held firm with minimal drops from both regional and international accounts allowing Mashreq to launch the transaction by setting the yield at 7.125% and pricing the Perpetual Non-Callable 5.5-year Additional Tier 1 bond offering at a reset margin of +270.5bps. This records the tightest ever margin for Mashreq for a subordinated Additional Tier 1 or Tier 2 capital issuance while registering the lowest coupon for any UAE bank’s Additional Tier 1 offering in the last 3 years.
Mashreq’s Group Chief Executive Officer, Ahmed Abdelal, remarked, “We are pleased with the robust investor engagement and support for this strategic transaction. The oversubscription amid a volatile market is particularly gratifying. This transaction will enable Mashreq to continue its growth plans into 2024 and beyond.”
Chairman H.E. Abdul Aziz Al Ghurair also congratulated the team on the Mashreq’s most successful capital notes issuance.
The transaction was well distributed across international and regional investors, reaffirming the investor community’s long trust in Mashreq’s credit. The Middle East received the majority of the allocation at 77.5%, while Europe (including the United Kingdom) accounted for 19.5% of the demand. The balance was divided between Asian markets and offshore US interest. Real money demand from private banks and high quality asset managers took the lion’s share of the issuance securing 90% of the allocations. A combination of bank treasury divisions and hedge funds took the rest.
The bookrunners for the issuance were Abu Dhabi Commercial Bank, Al Ahli Bank of Kuwait (DIFC Branch), BofA Securities, Citi, Emirates NBD Capital, First Abu Dhabi Bank, Kamco Investment Company, Mashreq and Mizuho.
