KUWAIT CITY, Oct 5: Moody’s Investors Service assigned a provisional Baa1 long-term local-currency rating to National Bank of Kuwait’s (NBK) planned issuance of Kuwaiti dinar-denominated subordinated bonds with contractual point of nonviability (PONV) loss absorption features for the first time in Kuwait and the GCC. NBK is considering issuing Kuwaiti Dinars up to 125 million Tier 2 subordinated bonds.
The issuance would be used to boost NBK’s capital as per Basel III requirements and the directives of the Central Bank of Kuwait. Moody’s said “The rating assigned to NBK’s Tier 2 PONV instrument reflects the specific characteristics of the security being issued and our view on how the Kuwaiti regulatory authorities would likely resolve an ailing bank, in addition to NBK’s standalone credit profile, which underpins the BCA assigned to the bank and constitutes the anchor point for positioning the debt on Moody’s global rating scale.”
Moody’s stresses that this is the first time the agency assigns a rating to a Basel III-compliant subordinated debt instrument issued by a bank in Kuwait and the GCC in general. Moody’s noted that NBK already carries local and foreign currency deposit ratings of Aa3 stable, reflecting the bank’s dominant position in its domestic market underpinning its resilient core profitability and robust financial fundamentals, including consistently good asset quality metrics and strong Basel III capitalisation ratio.
NBK has received the final approval from the Central Bank of Kuwait and a preliminary approval from the CMA (Capital Market Authority) on the issuance. In the meantime, the bank is currently in the process of obtaining the remaining required approvals. NBK has mandated NBK Capital and KAMCO as Joint Lead Managers and Arrangers for the transaction. NBK is the largest financial institution in Kuwait with effective market dominance in the commercial banking market.
It enjoys a broad banking presence with an international network of worldwide branches in four continents. NBK’s international presence spans many of the world’s leading financial centers including London, Paris, Geneva, New York and Singapore, as well as China (Shanghai). Meanwhile, regional coverage extends to Saudi Arabia, Bahrain, UAE, Lebanon, Jordan, Iraq, Egypt, and Turkey.