Saudi Arabia targets $2 billion with new Islamic bonds

The marketing exercise comes a day after sources told Reuters that Saudi Arabia was planning to issue a new dollar sukuk shortly. (File/AFP)
Updated 12 September 2018
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Saudi Arabia targets $2 billion with new Islamic bonds

  • 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
  • The marketing exercise comes a day after sources told Reuters that Saudi Arabia was planning to issue a new dollar sukuk shortly

DUBAI: Saudi Arabia has started marketing US 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 sukuk shortly.
The sukuk, due to settle on Sept. 19 and with a January 2029 maturity, are expected to price later on Wednesday, according to the document.
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 sharia-compliant investors.


Apple’s Cook to China: keep opening for sake of global economy

Updated 11 min 54 sec ago
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Apple’s Cook to China: keep opening for sake of global economy

BEIJING: Apple chief executive Tim Cook nudged China on Saturday to open up and said the future would depend on global collaboration, as the United States and China remained locked in a bitter trade dispute.
“We encourage China to continue to open up, we see that as essential, not only for China to reach its full potential, but for the global economy to thrive,” Cook said at a China Development Forum in Beijing.
Despite official pledges and repeated assurances that China would continue to open its markets, some analysts worry that its reform project has slowed or even stalled under President Xi Jinping, who has sought greater control over the economy and a bigger role for state-owned firms at the expense of the private sector.
Cook’s comments come as Apple weathers sinking sales in China because of a contracting smartphone market, increasing pressure from Chinese rivals, and slowing upgrade cycles. The company reported a revenue drop of 26 percent in the greater China region during the quarter ending in December.
Before those results came out, in a January letter to investors, Cook blamed the company’s poor China performance on trade tension between the United States and China, suggesting that pressure on the economy was hurting sales in China.