NBK floats its first KD bond

The National Bank of Kuwait’s issue of KD 125 million of subordinated Tier 2, Basel III compliant bonds, the bank announced today was oversubscribed by 100 per cent, the bank said today.

They are the first investment grade-rated Basel III-compliant, subordinated Tier 2 bonds in the Middle East region. The proceeds will be used to boost NBK’s Tier 2 and for general and corporate purposes.

The bonds have a 10-year tenor and are callable after five years or on any interest date thereafter. They were priced at 100 per cent and were issued in equal proportion between fixed and floating-rate tranches.

The fixed-rate bonds have interest of the Central Bank of Kuwait’s (CBK’s) discount rate plus 275 basis points a year for the first five years. This will be reset after five years to the the prevailing CBK discount rate plus 275 basis points. The interest on the floating-rate bonds is the CBK Discount Rate plus 250 basis point. It is capped at 1.00 per cent above the interest paid on the fixed-rate bonds.

The transaction follows NBK’s $700 million additional Tier 1 capital securities in April 2015. It is the bank’s first KD-denominated debt capital markets issuance.

Watani Investment Company and KAMCO Investment Company acted as joint lead managers on the transaction.