Saudi Arabia’s Almarai is preparing to issue up to SR2bn ($533m) of senior sukuk (Islamic bonds), depending on market conditions.

The issuance will fund the food and dairy company’s SR21bn investment programme over the next five years.

Almarai is a veteran of sukuk markets. It issued SR2.3bn of five and seven-year sukuk in 2012 and 2013. It also issued SR1.7bn of hybrid sukuk in 2013. The latter count towards the company’s equity position as they have a perpetual maturity.

The local Samba Capital and UK bank HSBC’s Saudi Arabia arm have been appointed joint lead managers on the issuance. Almarai is holding meetings with Saudi-based investors this week.

The sukuk have not been rated.

The decision comes against a backdrop of falling sukuk issuances. In the GCC, sukuk and bond issuance declined 25 per cent in the first half of 2015, compared with the same period in 2014, according to the US’ Fitch Ratings. It attributed the decline to more volatile global financial market conditions due to falling oil prices, the debt crisis in Greece and speculation over a Federal Reserve increase in interest rates.

The recent government bond issuances will encourage corporate bonds by setting yield curves and developing debt markets.