Saudi Arabia is set to issue government guaranteed sukuk (Islamic bonds) that will be used to fund the development of Jeddah and Riyadh airports, the second time that the General Authority for Civil Aviation (Gaca) has issued bonds to fund airport projects.

In January 2012, Gaca raised SR15bn ($3.99bn) from the local sukuk market to fund the SR27.1bn development of Jeddah airport, the first time that state-backed bond issued had been used to fund infrastructure projects.

“The rest of the bonds for the King Abdulaziz Airport in Jeddah and the Kin Khaled Airport in Riyadh will be issued this [coming] year,” said Finance Minister Ibrahim Alassaf on Al-Arabiya television.

Gaca’s first sukuk issue had a profit rate of 2.5 per cent.