Saudi lender Arab National Bank (Tadawul: 1080) completed a $750mn issue of dollar-denominated additional tier 1 sukuk priced at 6.5%, according to a statement on the Tadawul exchange on September 3.

The pricing gives a read on what investors demand to hold perpetual, loss-absorbing Gulf bank capital in a market unsettled by the Iran-US war: a 6.5% coupon on a strongly rated Saudi lender points to a risk premium that has held up despite regional conflict, as banks press ahead with capital raising to fund lending growth tied to the kingdom's economic diversification. Additional tier 1 instruments count towards a bank's core capital and carry no fixed maturity.

The perpetual sukuk, callable after five years, was issued through a special purpose vehicle and will be listed on the London Stock Exchange's International Securities Market. The issue comprised 3,750 certificates with a par value of $200,000 each. Settlement is due on September 9.

The bonds may be sold under Regulation S of the US Securities Act. The bank had mandated ANB Capital, Arab Bank, Arqaam Capital, ASB Capital, Citigroup Global Markets, Goldman Sachs International, HSBC Bank, Mizuho International, Standard Chartered Bank and Kuwait's Warba Bank as joint lead managers and bookrunners.

Proceeds are intended to strengthen the bank's tier 1 capital and for general banking purposes.

Arab National Bank reported a 6.5% year-on-year rise in second-quarter net income to SAR1.42bn ($379mn). Founded in 1979, it provides retail and corporate banking services and has a market value of about SAR45.6bn. Jordan's Arab Bank holds the largest stake at 40%.