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UPDATE 2-Saudi Arabia sets size of debut dollar sukuk at $8 bln -sources
April 12, 2017 / 9:55 AM / 8 months ago

UPDATE 2-Saudi Arabia sets size of debut dollar sukuk at $8 bln -sources

(Adds details, background)

By Davide Barbuscia

DUBAI, April 12 (Reuters) - 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 oil prices.

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 bookrunners.

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

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