Dubai: Saudi Arabia raised $9 billion (Dh33 billion) in its debut record sukuk, the finance ministry said on Thursday, pointing to robust demand to the dollar-based bonds from the region.
The order book was in excess of $33 billion, receiving “significant interest” for the issue, the ministry of finance said in a statement.
“This [response from investors] reflects the strong fundamentals of the Saudi economy ...,” the ministry of finance said.
About $4.5 billion was raised for the 5-year tranche with a coupon rate of 2.894 per cent, while another $4.5 billion was raised with a coupon rate of 3.628 per cent for the 10-year tranche.
“With improving understanding and growth of the Islamic finance, many conventional bond investors also invest in sukuk these days. So the takers of the sukuk are not just Sharia complaint funds or the ALM books of the Islamic banks but also the private banking clients and international hedge funds,” Anita Yadav, Senior Director, Global markets and treasury at Emirates NBD said in an email to Gulf News.
Analysts expect more issues to come out of Saudi, which has been running wide deficits.
On an yearly basis, Emirates NBD expects $20 billion worth of issuance from Saudi Arabia including issues from the government, and state-run enterprises, banks and corporates.
“We expect bond/sukuk issuance to remain elevated at around or higher than last year’s $72 billion mainly because of governments’ willingness to use debt funding and preparedness to manage debt is higher now,” Yadav said, referring to the GCC.
In addition, rising interest rates may prompt issuers to front-load their needs.
