Bank AlJazira announced on March 12 the successful conclusion of its Additional Tier 1 (AT1) sukuk offering, raising SAR 1.46 billion through a private placement to qualified investors across Saudi Arabia. The issuance was executed under the bank’s SAR 5 billion AT1 Capital Sukuk Programme, with AlJazira Capital and Al Rajhi Capital serving as joint lead managers and bookrunners for the transaction.
A 6.35% Coupon With Five-Year Reset
The AT1 sukuk carries a profit rate of 6.35% per annum from the date of issuance until March 31, 2031, at which point the rate will be reset in accordance with the terms specified in the sukuk’s final documents. Thereafter, the rate resets every five years on the same basis. This structure is consistent with global AT1 instrument conventions, providing investors with a fixed income horizon while allowing the issuer to manage its capital costs over longer periods.
As perpetual instruments, AT1 sukuk have no fixed maturity date but may be redeemed under specific conditions as detailed in the sukuk’s base prospectus. The issuance was offered exclusively to eligible institutional and qualified investors in Saudi Arabia, in line with the Capital Market Authority’s regulations governing private placements.
Strengthening Capital Adequacy for Growth
AT1 capital instruments serve as a buffer layer within a bank’s capital structure — sitting between common equity (Tier 1) and Tier 2 capital — and are recognized by global regulators for their role in absorbing losses and supporting financial stability. For Bank AlJazira, the SAR 1.46 billion raised through this issuance enhances its capital adequacy ratios and provides additional headroom to support loan growth, business expansion, and regulatory compliance under Basel III frameworks.
The bank’s board had initially approved the issuance on February 5, 2026, with the size and final terms to be determined by prevailing market conditions at the time of pricing. The conclusion of the offering within weeks of the board approval indicates strong institutional demand for Saudi bank paper — a trend consistent with the Kingdom’s buoyant banking sector, which has benefited from elevated oil revenues, Vision 2030 project activity, and robust consumer lending growth.
Saudi Islamic Capital Markets in Full Stride
Bank AlJazira’s successful sukuk closing adds to a growing pipeline of Saudi financial institutions accessing the Islamic capital markets in early 2026. As Tadawul-listed banks seek to optimize their capital structures in line with growth ambitions and regulatory requirements, the SAR-denominated sukuk market has emerged as a deep and liquid channel for institutional funding, reinforcing Saudi Arabia’s position as a leading global hub for Islamic finance.
