Riyadh closes second domestic sukuk

22 August 2017

Strong interest seen in Saudi government paper

Saudi Arabia has closed its second local currency sukuk (Islamic bond), raising SR13bn ($3.5bn), the Finance Ministry has said. Orders exceeded SR38bn, meaning the sukuk was nearly three times oversubscribed. The sukuk was divided into three tranches with maturities ranging from five to 10 years.

The first tranche, of SR2.1bn, matures in 2022; the second tranche, of SR7.7bn, matures in 2024; and the third tranche, of SR3.2bn, matures in 2027.

Riyadh’s first domestic sharia-compliant bond closed in late July, raising SR17bn. It was also three times oversubscribed, showing strong appetite for government paper in the kingdom. It was likewise divided into three tranches.

Riyadh has launched the domestic sukuk programme to help cover its large budget deficit, caused by the collapse in oil prices. Thirteen Saudi banks have been qualified to participate in the programme.

Previously, Saudi Arabia secured $10bn through a conventional loan and more than $17bn when it sold a record-breaking debt bond in October 2016. Riyadh also raised $9bn through a dollar-denominated dual sukuk deal earlier this year.

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