Commercial Bank has successfully launched a senior unsecured five-year bond worth $500mn at a new price benchmark.
The transaction was launched at the set spread of +175 bps over five-year Mid Swaps and priced at a coupon rate of 2% and yield of 2.083%. The issue was also oversubscribed 3.8 times.
This transaction marked Commercial Bank’s successful return to the “US $ public markets” since 2018 and effectively repriced the bank's funding curve down.
Group chief executive officer Joseph Abraham attributed the “success” to “very positive views” from investors on Qatar’s “strong” economy and fiscal buffers, and the “strength” of Qatar’s banking system.
Investors have positively viewed the strong execution of Commercial Bank’s five-year strategy which has significantly improved the performance of the bank.
Some of the highlights of the transaction are:
• Negative 15bps new issue premium with fair value (FV) calculated at +190bps ahead of book-building based on the trading levels of CB 2023s.
• At 2.083% yield and 2.000% coupon, Commercial Bank registered the lowest funding levels achieved on a US$ public transaction.
• This is also the second lowest coupon ever achieved by a Qatari FI issuer on a public transaction.
• Impressive 40bps compression on the day with very little impact to the final order book. This represents the biggest tightening on a conventional senior FI GCC bond since 2019.
• Despite a busy market and two previous Qatari FI issuances in as many weeks, Commercial Bank was able to attract close to 140 investors with very few dropping despite strong price revisions.
• Order book of $2.3bn before final book standing at $1.9bn, reflecting a 3.8x oversubscription despite the price tightening during the book build.
The allocation statistics, by geography and investor type, are:
Distribution by geography: Europe (35%), Mena (27%), Asia (20%), UK (16%), other (2%)
Distribution by investor type: FM/AM (33%), bank (30%), insurance (18%), PB (9%), Pension /SWF (6%) and other (4%).
