Al Rajhi Bank Launches $1 Billion Sustainable Sukuk
In a bold move, Al Rajhi Bank, the world’s largest Islamic bank, has launched $1 billion in Additional Tier 1 sustainable sukuk, also known as Islamic bonds. This groundbreaking financial transaction was revealed by a document from one of the banks arranging the deal on Thursday.
The final yield for this debt transaction was locked in at 6.375 percent, which was even tighter than the initial guidance of approximately 6.875 percent that was released earlier in the day. These notes are perpetual in nature and have the option for redemption as early as May 2029.
The demand for this deal was overwhelming, with more than $3.5 billion in orders received. The allocation process is expected to take place later in the day, as indicated in the document.
AT1 bonds, the riskiest debt instruments that banks can issue, are intended to be perpetual. However, there is a provision that allows lenders to call them back after a specified period of time. This innovative financial move by Al Rajhi Bank is a testament to their commitment to sustainable finance and market leadership.