Saudi Arabia targets $2 billion with new Islamic bonds
(Adds details, context, banks arranging the deal)
By Davide Barbuscia
DUBAI, Sept 12 (Reuters) - Saudi Arabia has started
marketing U.S. dollar-denominated sukuk, or Islamic bonds, with
the issue expected to be around $2 billion in size, a document
showed on Wednesday.
It would be the kingdom's second international sale of sukuk
after a $9 billion transaction last year. The exercise completes
Saudi Arabia's external funding requirements for 2018, according
to the document.
The kingdom, acting through the ministry of finance, started
marketing the notes with an initial price guidance of around 145
basis points over mid-swaps.
Citi, HSBC and JPMorgan are coordinating the transaction,
and are joint lead managers together with BNP Paribas, Mizuho
and Samba Capital.
The structure of the sukuk is the same one adopted for the
2017 issue, comprising a mudaraba agreement, a form of Islamic
investment management partnership, plus a murabaha facility that
would trade commodities with a special purpose vehicle.
The marketing exercise comes a day after sources told
Reuters that Saudi Arabia was planning to issue a new dollar
The sukuk, due to settle on Sept. 19 and with a January 2029
maturity, are expected to price later on Wednesday, according to
The government has raised a total of $50 billion in
international notes, both Islamic and conventional, since it
started tapping the international debt markets in 2016 as part
of its efforts to diversify its oil-reliant economy.
In April the government sold $11 billion in conventional
notes - an amount which covered the country's hard currency
funding needs for 2018, the head of the Saudi debt management
office told Reuters after that bond issue.
But he said an international sukuk deal was on the cards for
the second half of this year in order to maintain the country’s
presence in that market and to provide supply to
(Reporting by Davide Barbuscia in Dubai; additional reporting
by Sudip Roy in London; editing by Jason Neely and Louise
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