Saudi Arabia targets $2b for new sukuk

International sale of sukuk after a $9b transaction last year

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 yesterday.

It would be the country’s second international sukuk sale after a $9 billion transaction last year. The exercise completes Saudi Arabia’s external funding requirements for 2018, according to the document.

The country 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 sukuk’s structure is the same one adopted for the 2017 issue, comprising a mudaraba agreement, a form of Islamic investment management partnership, plus a murabaha facility to trade commodities with a special purpose vehicle.

The exercise comes a day after sources said Saudi Arabia was planning to issue a new dollar sukuk shortly. Due to settle on September 19 and with a January 2029 maturity, the sukuk is expected to price later.

The government has raised a total of $50 billion in international notes since it started tapping the international debt markets in 2016.