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Saudi Arabia launches dollar-dominated global sukuk

Saudi Arabia sukuk

The five times oversubscribed sukuk shows the ministry’s commitment to develop Shariah compliant debt markets

The Saudi Ministry of Finance has announced its third international sukuk issuance. The issuance was five times oversubscribed, the local media reported. 

The sukuk issuance under the Kingdom of Saudi Arabia’s Sukuk Issuance Programme and in the US dollars has orders totalling to more than $13 billion. It reflects the ministry’s vision to develop Shariah compliant debt markets. 

The Kingdom of Saudi Arabia’s sukuk issuance is set to increase 6 percent to $130 billion for the fourth consecutive year, according to a Moody’s report.  Nitish Bhojnagarwala, VP-senior credit officer at Moody’s, told the media that, “Increased activity in Saudi Arabia and Malaysia helped drive strong issuance of $87 billion in the first six months and this has reduced funding needs.” 

The Kingdom will issue a total of $2.5 billion sukuks maturing October 2029, the local media reported. The Debt Management Office appointed investment banks JP Morgan, Standard Chartered and Bank Al Jazira Capital as dealers for this issuance. 

Green sukuks could boost issuance in the Kingdom. Currently, the green sukuk market is in its nascent stages of development.

The Kingdom is also seeking to raise $2.5 billion of Islamic bonds, Bloomberg reported. It has outlined an initial price guideline for a 10-year sukuk at between 145 basis points and 150 basis points over the benchmark rate.

The Kingdom is preparing to host international investors next week or its Future Investment Initiative, an annual investment forum organised by the Public Investment Fund. Future Investment Initiative will be held in Riyadh from October 29-31, 2019. 

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