(Adds details, background)
By Davide Barbuscia
DUBAI, April 12 Saudi Arabia has set the final
size of its planned debut international Islamic bond or sukuk at
$8 billion, split equally between a five-year and a 10-year
tranche, sources familiar with the matter said on Wednesday.
The bond, which will be priced later on Wednesday, will be
the largest sukuk ever issued and forms part of plans by Saudi
Arabia to start tapping international debt markets to diversify
its sources of finance and plug a budget deficit caused by low
Saudi Arabia has gathered orders in excess of $33 billion
for the issuance, evenly split across the two tranches, one of
the banks leading the deal said.
Fixed income market sources had expected the deal to be in
excess of $10 billion in size.
The final spreads for the bond are 100 basis points over
mid-swaps for the five-year notes and 140 basis points over
mid-swaps for the 10-year.
Initial price guidance, released on Tuesday, put the Islamic
bonds at around 115 and 155 bps over mid-swaps, respectively.
Citi, HSBC and JP Morgan are the
global coordinators, joined by BNP Paribas, Deutsche
Bank and NCB Capital as joint lead managers and
Saudi Arabia issued a debut conventional U.S. dollar bond in
October last year, raising $17.5 billion in what was the largest
bond ever sold across emerging markets.
This deal was expected to set a benchmark for the country
and pave the way for further international issues by the
government in coming years, as well as bond sales by a string of
big Saudi companies.
Saudi Arabia is rated A1 by credit rating agencies Moody’s
and A+ by Fitch.
(Additional reporting by Robert Hogg. Editing by Jane Merriman)