Saudi’s Riyad Bank prices $1.1 bln local-currency sukuk

Riyad Bank, the third-largest lender by market value in the kingdom, sold an Islamic bond worth 4 billion riyals ($1.07 billion) through a private placement, it said in a bourse filing on Thursday.

The bank priced the issue at 0.68 percent over the three-month Saudi interbank lending rate .

The sukuk has a lifespan of seven years but can be called – or repaid – by the bank at the end of the fifth year.

The sukuk, a rare offering from the bank, will be used to diversify its funding sources, extend the maturity of its funding and support the financing of sharia-compliant business, the statement added.

Riyad Bank is the latest Saudi lender to issue a riyal-denominated sukuk, tapping into a highly liquid local investor pool to secure cheaper, longer-term finance that would be hard to obtain through the loan market.

Many banks have issued or plan to issue Islamic instruments to boost their capital following a period of significant lending growth in the kingdom. They include Saudi Hollandi Bank, Saudi British Bank , Banque Saudi Fransi and National Commercial Bank.

(REUTERS)


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