Dubai: Kuwait’s Burgan Bank has chosen banks to arrange meetings with investors ahead of a potential issue of a capital-boosting bond, a document from lead managers said on Thursday, in what would be the first such debt sale from a Kuwaiti entity.

The lender, the Gulf Arab state’s third-largest by assets, will hold roadshows in Asia, the United Arab Emirates and Europe from Sept. 4, with a bond issue that enhances the bank’s Tier 1 — or core — capital ratio to follow, subject to market conditions.

Should the US dollar-denominated bond issue happen, it will have a perpetual lifespan and be of benchmark size — traditionally understood to mean worth upwards of $500 million.

Tier 1 bonds, which are debt instruments with equity characteristics, are rare in the Gulf region but have been growing in popularity in recent months as banks look to use historically low borrowing rates to boost capital reserves.

Such instruments have a number of benefits for Gulf-based banks, as they are favourably regarded under the upcoming Basel III standards for global banking. Also, they aid in diversifying banks’ ownership structure, which has traditionally been dominated by shareholder equity.

There have been four Tier 1-boosting debt issues from the Gulf, all of which have come from the United Arab Emirates. The latest was unlisted Al Hilal Bank, which sold a $500 million perpetual sukuk in June.

Burgan Bank’s chief executive, Eduardo Eguren, said in March that the lender wanted to raise its capital before the end of the year to help it comply with Basel III guidelines, with perpetual bonds a potential route.

The investor meetings will be arranged by HSBC as global coordinator and Citi, JPMorgan and National Bank of Abu Dhabi as lead managers, the document added.