Saudi Binladin Group meets investors ahead of sukuk sale

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Sharia, Sharia compliance, sukuk, Islamic finance

Sharia, Sharia compliance, sukuk, Islamic finance

Saudi Binladin Group, one of the largest construction firms in the kingdom, is currently meeting fixed income investors as it plans to issue a new local currency Islamic bond, or sukuk, four sources aware of the matter told reporters.

Roadshows are due to take place this week and next, at which point the size and pricing of the deal would be determined, a banking source said, speaking on condition of anonymity as he was not authorised to speak to media.

All-in pricing is likely to be around 2.5 percent, a second banking source said, giving a spread over the three-month Saudi interbank offered rate (Saibor) of around 150 basis points.

Given the amount of liquidity local investors have to deploy, a sukuk offering from the leading construction firm is likely to be in high demand - previous issues from Binladin Group have been well oversubscribed.

Saudi companies looking to raise funds have increasingly turned to the kingdom's debt capital markets as they aim to diversify funding sources away from bank loans and take advantage of high investor liquidity.

Dairy firm Almarai is also in the process of holding roadshows ahead of issuing a local currency sukuk. Those meetings are being arranged by NCB Capital.

The Binladin Group offering has a 2.5-year lifespan, which makes it its longest-running Islamic bond so far.

The company was last in the market in August when it issued a 1 billion riyals ($266.7 million) one-year sukuk through HSBC's Saudi Arabian unit. That deal was also priced at 2.5 percent.

It also sold a 700 million riyal sukuk with a nine-month tenor in July 2010 and a 1 billion riyal one-year sukuk in July 2011.

The latest offering is being arranged by the investment banking arm of Banque Saudi Fransi.

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