EM CEEMEA CREDIT: Bank Al Jazira: FV for mandate $ AT1 PNC5.5 Sukuk
Sep-15 06:58
(JAZCOR; A3/NR/A-)
IPT @ 6.875% area FV @ 6.30%
- We see FV at z+300bp or 6.30% yield area. For comparables, we look at numerous, recently issued $ AT1 deals. We assume a benchmark size roughly as per average, in the region of $500mn to $750mn.
- Focusing on similar Sukuk format structures, we note peer bonds chart as follows:
- Higher rated – Arab National Bank (A1/A-/A-) ARNBAB 6.4 PERP Sukuk @ z+305bp or 6.33% area (priced beg-Sep at 6.40% yield, $750mn).
- Similar - Alinma Bank (A2/A-/A-) ALINMA 6.25 PERP Sukuk @ z+293bp or 6.22% area (priced end-Aug at 6.25% yield, $500mn).
- Similar - Bank Albilad (A2/NR/A-) ALBIAB 6.5 PERP Sukuk @ z+298bp or 6.25% area (priced mid-May at 6.50%, $650mn).
- Higher rated - Saudi Awwal Bank (A1/NR/A-) SABBAB 6.5 PERP Sukuk @ z+277bp or 6.05% area (priced mid-May @ 6.50%, $650mn).
- Higher rated, larger deal size - Al Rajhi Bank (Aa3/A/A-) RJHIAB 6.25 PERP Sust. Sukuk @ z+275bp or 6.02% (priced mid-Jan at 6.25%, $1.5bn).
- Similar - Saudi Investment Bank (A2/BBB+/A-) SIBCAB 6.375 PERP charts at z+285bp or 6.12% area (priced end-Nov at 6.375%, $750mn).
- Among non-Sukuk instruments, we look at:
- Higher rated - Banque Saudi Fransi (A1/A-/A-) BSFR 6.375 PERP charting at z+294bp or 6.23% area (priced end-Apr @ 6.375%, $650mn).
- Higher rated - Banque Saudi Fransi (A1/A-/A-) BSFR 6.375 PERP charting at z+294bp or 6.23% area (priced end-Apr @ 6.375%, $650mn).
- For context, Saudi Arabia’s domestically focused Bank Al Jazira runs a balanced mix of corporate and retail segments. We look at reported H1 results, broadly in line with guidance. We note growth in top line rev’s (NFII SAR1.5bn +21% y/y, net F&C SAR665mn, +23% y/y), improving profitability (PBT at SAR848mn, +20% y/y; NIM at 2.17%, +14bp y/y and+18bp vs FY24 at 1.99%), efficiency (C/I ratio at 52.3% vs FY24 at 56%), expansion (total assets at SAR157.6bn, +6% vs YE24, in line with deposits +6% YtD), stable asset quality (NPL ratio at 1.47% for Q2 with low CoR at 0.38% and conservative coverage at 162%) and adequate capital position (CET1 at 11.7% for Q2, marginally lower sequentially).
H1'25 Financial Indicators Total Assets (SAR bn) PBT (SAR bn) NIM (%) NPL Ratio (%) CET1 (%) Al Jazira Bank 157.6 0.85 2.17 1.47 11.7 Albilad Bank 161.9 1.63 3.22 1.05 15.1 Alinma Bank 297.2 3.43 3.52 1.25 13.7 Arab National Bank 269 3.08 3.67 1.18 16.5 Banque Saudi Fransi 301.5 3.06 3.11 0.97 16 Saudi Awwal Bank 432.4 4.92 2.7 1.42 14.8 Saudi Investment Bank 167.3 1.18 2.35 0.96 13.8 Source: MNI, Co. data, Bloomberg Finance L.P.
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