Rakbank issues $500m bond as it pays debt and pursues growth plans

The lender received strong investors interest with orderbook of the deal reaching $2bn

Rakbank on Wednesday said it has successfully closed a $500m bond sale. Courtesy: Rakbank

The National Bank of Ras Al Khaimah, or Rakbank, completed a $500 million (Dh1.84 billion) US dollar-denominated bond sale as the lender looks to pay maturing debt and pursue its growth plans.

The Ras Al Khaimah-based bank sold the five-year bond which pays an annual interest of 4.125 per cent, equivalent to 185 basis points over five-year mid swaps, a benchmark of pricing, it said on Wednesday in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

The bank, rated Baa1 by Moody's Investors Service and BBB+ by Fitch Ratings with stable outlook, received strong investors interest with the orderbook of the deal reaching $2bn. It allowed the lender to price the bond 25 bps lower than the initial price guidance of 210 bps, it said.

“Our return to the bond market is in line with our funding diversification efforts,” said Rakbank chief executive, Peter England. “This bond issuance will support our long-term funding requirements, which in turn supports our digitisation and diversification strategy, at the heart of our 2020 Strategic Plan.”

The new funding will allow the lender to invest in improving its services across all business units and enhance its digital offering, he said.

The senior unsecured bond offering, under Rakbank’s $2bn Euro Medium Term Note (EMTN) programme will be used as part of the bank’s liquidity management pool in advance of the repayment of an existing bond maturing in June 2019, the lender said ahead of the bond roadshow, which took place in Hong Kong, Singapore and London.

Bank ABC, Citi, Emirates NBD Capital, First Abu Dhabi Bank, ICBC and Standard Chartered acted as joint lead managers and book-runners on the deal.

The bank, which had issued an $800m bond under its EMTN programme, expects to post higher earnings rather than just lower provisions in 2019 compared with last year after it reported a 13.2 per cent net profit increase for 2018 thanks to an 8.5 per cent drop in provisions, Mr England told The National in February.