Saudi National Bank’s $750 Million Formosa Bond Oversubscribed by $350 Million

Saudi National Bank has successfully issued a $750 million five-year Formosa bond, attracting an order book totaling $1.1 billion, including $121 million from joint lead managers. The bond, priced at the Secured Overnight Financing Rate plus 120 basis points, is scheduled to be listed on the Taipei Exchange on 17th March. Crédit Agricole CIB and KGI Securities Co Ltd served as joint managers, with HSBC acting as the lead manager.

Formosa bonds are debt instruments issued in Taiwan but denominated in foreign currencies, typically targeting international investors seeking exposure to foreign issuers. This issuance marks SNB’s second foray into the Formosa market, following its inaugural $500 million five-year senior unsecured floating-rate note bond in July 2024. That initial issuance was part of SNB’s $5 billion Euro Medium Term Note Programme and was notable for being the first by a Saudi bank in the Taiwanese market.

The latest bond issuance underscores SNB’s strategic efforts to diversify its funding sources and strengthen its presence in international capital markets. The oversubscription by $350 million indicates robust investor confidence in SNB’s creditworthiness and the economic stability of Saudi Arabia. This confidence is further bolstered by the bank’s proactive engagement with a broad set of top-tier international investors, reflecting the strong appeal of SNB’s credit profile to the global investor community.

In the broader context, Gulf Cooperation Council banks have been increasingly tapping into the Formosa bond market to diversify their funding bases and access competitive pricing. For instance, Qatar National Bank Group, the region’s largest bank, completed a $1 billion five-year Formosa bond issuance under its Euro Medium Term Note Programme in the first half of 2024. This trend highlights the growing significance of the Formosa market as an attractive platform for Middle Eastern banks seeking to broaden their investor base and secure favorable funding terms.

SNB’s successful bond issuance aligns with Saudi Arabia’s Vision 2030 initiatives, which aim to diversify the Kingdom’s economy and reduce its dependence on oil revenues. By accessing international capital markets and engaging with a diverse range of investors, SNB is contributing to the development of a more resilient and diversified financial sector in Saudi Arabia.

The choice of SOFR as the benchmark rate for the bond pricing reflects a broader shift in global financial markets toward alternative reference rates, following the phase-out of the London Interbank Offered Rate . SOFR, based on overnight transactions in the U.S. Treasury repurchase market, is considered a more robust and reliable benchmark, aligning with international best practices.