Bahrain’s GIB Sets Guidance On 2bn Saudi Riyal Floater -IFR

Bahraini lender Gulf International Bank has set guidance of 72.5 basis points over the three-month Saudi interbank lending rate on a new two billion Saudi riyal ($533 million), five-year private placement floating rate note.

The issuer completes investor meetings for the deal on May 5 and settlement is scheduled for May 11.

The order book is already oversubscribed, according to a source.

Guidance compares well with other recent deals. Riyad Bank, for example, recently priced a 4 billion riyal, seven-year non-call five FRN at 68 bps over three-month Saibor.

Given that Riyad Bank is rated between one and three notches higher at A1/A+/A+, pricing at the guidance level of 72.5bp would be a good outcome for GIB, the source said.

The reason why the book is oversubscribed at these comparatively tight levels is because of GIB’s ownership: despite being domiciled in Bahrain, it is 97.2 per cent owned by the government of Saudi Arabia through its sovereign fund.

All five other Gulf Cooperation Council countries also have small stakes in the lender, making up the remaining 2.8 per cent.

Notwithstanding its ownership, most of the bank’s assets are Bahraini, and Bahrain is rated lower than Saudi Arabia. Still, because the bank has a history of support from the Saudi government, many investors are comfortable with the credit.

The deal will be managed by GIB Capital, NCB Capital, Samba Capital and Saudi Fransi Capital (Credit Agricole).

The proceeds will be used for general financing requirements.

GIB was last in international capital markets in December 2012 when it printed a $500 million five-year note at a yield of 2.404 per cent, or 178.4 bps over U.S. Treasuries.