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Thursday, July 18, 2024

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alrajhi bank’s Sukuk: Supporting sustainability

alrajhi bank made its return to the international capital market with a US dollar-denominated sustainable Sukuk facility it sold on the 12th March 2024. NESSREEN TAMANO has the details.

The US$1 billion Islamic facility carries a tenor of five years and a return rate of 5.05% per annum, and was issued under the bank’s international Sukuk program. It is listed on the London Stock Exchange’s International Securities Market.

Sold to eligible investors in the Kingdom and internationally, the Sukuk issuance was arranged by joint lead managers and bookrunners Al Rajhi Capital Company, Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup Global Markets, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, Goldman Sachs International, HSBC Bank, KFH Capital Investment Company, SMBC Capital Markets, Societe Generale and Standard Chartered Bank.

The spread was narrowed to 90bps over US Treasuries from 120bps after orders topped US$2.8 billion, Forbes Middle East reported.

Proceeds from the issuance will be used by alrjahi bank to fulfill its financial and strategic objectives under its sustainable finance framework, it said. The framework was published in 2022.

This Sukuk issuance is the second of its kind from alrajhi bank; in April 2023, the bank launched its debut sustainable Sukuk, also its first international offering, for the same amount of US$1 billion, which was oversubscribed 3.75 times.

The Saudi bank, which is the largest Islamic bank in the Kingdom and in the Middle East (with assets worth over SAR801 billion (US$213.45 billion)), joins a group of its GCC peers that have launched sustainable Sukuk issuances in the last six months.

These include Dubai Islamic Bank’s US$1 billion offering in February 2024; QIIB’s sustainable issuance worth US$500 million in January 2024; and First Abu Dhabi Bank’s green Sukuk facility worth AED1.3 billion (US$353.93 million) in November 2023, which was touted as the UAE’s first-ever dirham-denominated green Sukuk.

alrajhi bank’s Sukuk

US$1 billion

12th March 2024
Summary of terms and conditions
Al-Rajhi Sukuk
alrajhi bank
Five years
Profit rate
5.05% per annum
Maturity date
12th March 2029
Joint lead managers and bookrunners
Al Rajhi Capital Company; Abu Dhabi Commercial Bank; Abu Dhabi Islamic Bank; Citigroup Global Markets; Dubai Islamic Bank; Emirates NBD Capital; First Abu Dhabi Bank; Goldman Sachs International; HSBC Bank; KFH Capital Investment Company; SMBC Capital Markets; Societe Generale; Standard Chartered Bank
London Stock Exchange
Expected rating of ‘A-’ from Fitch Ratings; Expected rating of ‘A1’ from Moody’s Investors Service

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