NBK successfully issues KD 150m Tier 2 subordinated bonds

24/11/2025 02:44 AST

National Bank of Kuwait (NBK) announced the successful issuance of KD 150 million Tier 2 subordinated bonds, aimed at enhancing Tier 2 capital adequacy in accordance with Basel III requirements and the Central Bank of Kuwait's guidelines. This issuance serves to refinance NBK's outstanding KD 150 million bonds, initially issued on 18 November 2020.

Marking NBK's third market entry in 2025, the transaction is also the Bank's first Kuwaiti-dinar-denominated issuance to incorporate a par call option, providing a 3-month call window from year 5 up to 5 years and 3 months It received an investment-grade rating of A- from Fitch Ratings, the highest rating assigned in Kuwait to a Tier 2 instrument and stands as the largest domestically issued bond of its class offered to fixed-income investors through a private placement structure.

Order books reached approximately KD 315.5 million, more than 2.1x oversubscribed. Subscription opened on November 3 and closed on November 13, with the issuance and settlement completed on November 18. The issuance attracted strong interest from a diverse base of institutional and retail investors in Kuwait. The new issuance was conducted with a liability management exercise, allowing existing holders of the old securities issued in 2020 to exchange their holdings into the new bonds. Notably, 45 percent of holders of the redeemed bonds elected to roll over their investments into the new issuance. This rollover reflects strong investor confidence in the Bank as a leading financial institution in Kuwait and a clear willingness from investors to maintain long-term exposure.

The bonds carry a tenor of 10.25 years and are callable after 5 years. The issuer retains the option to call the bonds at any point from 5 years after the issuance date up to 5 years and 3 months after the issuance date. The issuance comprises two tranches: a fixed-rate tranche and a floating-rate tranche. The fixed-rate portion carries an annual coupon rate of 5.25 percent for the first 5 years and 3 months, after which the rate will reset to 1.5 percent above the Central Bank of Kuwait's Discount Rate for the subsequent period.

As for the floating-rate tranche, the coupon carries an annual rate of 2.00 percent above the Central Bank of Kuwait's discount rate, capped at a maximum of 1 percent above the fixed-rate tranche. The coupon is calculated on a semi-annual basis, with interest distributions for both tranches paid semi-annually. NBK appointed KAMCO Investment Company "Kamco Invest", Kuwait Financial Centre "Markaz" and the National Bank of Kuwait"NBK" as Joint Lead Managers for the issuance.

Commenting on the issuance, Shaheen Al-Ghanim, Principal - Debt Capital Markets Desk Treasury Group said: "The strong investor appetite for our latest Tier 2 bond issuance reflects deep confidence in NBK's financial strength. The transaction was met with robust interest, achieving an oversubscription of more than 2.1x. Nearly half of our previous investors chose to reinvest in the new bonds, a clear vote of confidence in NBK and their commitment to stay with us for the long term."

"This issuance, which secured the lowest reset spread ever recorded for this class of bonds in Kuwait, has set a new benchmark in the domestic market -reflecting the profound confidence that local investors place in NBK's solid fundamentals and robust financial standing. The Investment Grade issuance rating of A- assigned by Fitch further underscores NBK's strong credit standing and financial position" Al-Ghanim added. He noted that this marks the Bank's third capital-markets transaction in 2025, underscoring NBK's resilience and its ability to capitalize on opportunities across varying economic conditions.

Kuwait Times