Alinma Bank to redeem SAR 5bn AT1 capital sukuk
ALINMA
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Riyadh – Mubasher: Alinma Bank intends to exercise the early redemption option for its SAR 5 billion Additional Tier 1 (AT1) Capital Sukuk, according to a bourse disclosure.
The bank confirmed that the redemption will cover the entire issuance at its nominal value, scheduled for the first contractual call date in July 2026, following the receipt of necessary regulatory approvals from the Saudi Central Bank.
Alinma Bank has initiated the process to redeem its Sharia-compliant Additional Tier 1 (AT1) Capital Sukuk. This specific issuance, which totals SAR 5 billion, was originally brought to market on 1 July 2021.
The instruments were structured to qualify as Additional Tier 1 Capital under the regulatory framework established by the Saudi Central Bank (SAMA), aimed at maintaining robust capital adequacy ratios within the kingdom's banking sector.
The bank has elected to exercise its right to redeem the Sukuk on the first available contractual call date, which is 1 July 2026. This redemption involves 100% of the total issuance, comprising 5,000 individual Sukuk certificates. Each certificate carries a nominal value of SAR 1 million.
Upon the completion of this transaction, the total outstanding value of the issuance will be reduced to zero, and the Sukuk will be delisted and cease trading on the exchange.
In terms of the financial settlement, the lender noted that the redemption price will include the full nominal value of the Sukuk.
Additionally, any accrued periodic distribution amounts, representing the profit due for the period ending on the redemption date, will be paid to the eligible holders. To facilitate an orderly payment process, the bank has set a record date of 16 June.
Investors holding the Sukuk at the close of business on this date will be entitled to receive the redemption proceeds and the final profit distributions.
The bank confirmed that it has already secured the required regulatory approvals from SAMA to proceed with this capital management exercise.
Such redemptions are standard practice for Tier 1 capital instruments, which typically feature a call option allowing the issuer to retire the debt after a five-year period, provided that the bank maintains a strong capital position and receives the central bank’s consent.
To manage the administrative and technical aspects of the payout, Alinma Bank has appointed Riyad Bank to act as the payment administrator. Furthermore, Riyad Capital has been designated as the Sukukholders’ Agent.
These entities will oversee the transfer of funds into the accounts of the Sukukholders on the scheduled payment date. The bank has provided specific contact channels through Riyad Capital and Riyad Bank for investors who require further information or clarification regarding the redemption mechanics.
This strategic move reflects Alinma Bank’s proactive approach to managing its balance sheet and optimizing its capital structure.
By redeeming these instruments on the first call date, the bank demonstrates its financial liquidity and adherence to the terms set forth during the initial issuance in 2021.
The transaction is expected to be completed seamlessly through the designated financial agents, ensuring that all obligations to Sukukholders are met in full compliance with Saudi financial regulations.
In May, Alinma Bank issued USD-denominated Sustainable Additional Tier 1 Capital Certificates, raising a total of $500 million under this offering.
Source: Mubasher Source: {{details.article.source}}