Saudi firm to debut US-dollar sukuk

The Gulf’s largest dairy company Almarai has hired banks including HSBC and First Abu Dhabi Bank to arrange a sale of US-dollar sukuk, or Islamic bonds, sources familiar with the matter say.

The sale would mark Almarai’s debut in the international debt markets, as the Saudi Arabian company has so far issued bonds in riyal.

The issue is expected to be of benchmark size, which generally means in excess of $500m, the sources said.

Almarai’s investor relations office declined to comment on the plan, saying it does not respond to rumours.

According to one of the sources, JPMorgan and Standard Chartered have also been appointed to arrange the sukuk.

Standard Chartered, JPMorgan and HSBC all declined to comment on the matter, as did First Abu Dhabi Bank.

THE ISSUE IS EXPECTED TO BE OF BENCHMARK SIZE, WHICH GENERALLY MEANS IN EXCESS OF $500M

Almarai’s chief financial officer told Reuters in May that the company planned to refinance 1.7-billion riyals ($453m) in sukuk by the third quarter of 2018. It also said it had hired an international adviser to complete the process.

At the end of September the company said it had redeemed 1.7-billion riyals in perpetual senior sukuk, issued in 2013.

Consumer goods companies and retailers in Saudi Arabia have suffered as consumer spending has been curbed by the introduction of a valueadded tax, higher energy prices and a fragile labour market.

Almarai and other Saudi exporters have also been affected by the loss of the Qatari market as a result of a diplomatic rift between Qatar and Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.

Almarai reported earlier in October that its third-quarter net profit fell to 634.5-million riyals, from 667-million riyals a year earlier.