A $500 million additional tier 1 bond offering with a 7.125 percent annual coupon was successfully priced by Mashreq on Monday.
With this deal, Mashreq entered the debt capital markets for the first time since their last issuance in 2022. It also resulted in the biggest price reduction for a tier 1 issuance by any UAE bank in the previous five years.
After a highly attended global investor call and two days of intense marketing, including a physical London roadshow, Mashreq decided to open the order books on Monday for a $500 million transaction with initial price thoughts (IPTs) in the high 7% range. Mashreq released a book update of slightly less than $1 billion due to strong demand early in the process, indicating strong momentum and demand from domestic and foreign investors. At that early stage, Mashreq could then release guidance moving over 50 basis points inside IPTs on the back of an order book exceeding $2.1 billion. The order book held firm despite the decisive move, with minimal drops from both regional and international accounts. This allowed Mashreq to price the Perpetual Non-Callable 5.5-year Additional Tier 1 Bond Offering at a reset margin of +270.5bps and set the yield at 7.125 percent.
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