(Updates with size, final price guidance, demand, background)
DUBAI, June 24 (Reuters) - Bank AlJazira is expected to raise $500 million on Thursday via an Islamic bond sale, a document showed on Thursday.
The bond or sukuk will price in the range of 3.95% to 4.05%, tighter than initial guidance of between 4.25% and 4.375% after the deal attracted more than $1 billion in orders, the document from one of the banks on the deal showed.
Alinma Investment Company, Aljazira Capital and JPMorgan are arranging the deal, which is expected to launch later on Thursday, the document, which was reviewed by Reuters, showed.
The deal is for Additional Tier 1 bonds, the riskiest debt instruments banks can issue, which are designed to be perpetual in nature but issuers can redeem or “call” them after a specified period. AlJazira’s sukuk will be non-callable for five years.
The deal was the latest in a series of international debt sales from the Gulf, as banks, companies and governments take advantage of low interest rates to bolster finances hit by last year’s oil price crash and the COVID-19 crisis.
Gulf banks and companies are expected to make up a clear majority of total issuance this year, a change for a region where sovereigns made up roughly half of all issuance last year and in 2019.
Several banks in the region have issued AT1 bonds this year to bolster their Tier 1 capital, including Kuwait Finance House selling $750 million AT1 Islamic bonds on Wednesday at 3.6%.
Reporting by Yousef Saba; Editing by Edmund Blair and Jane Merriman