Move aimed at shoring up supplementary capital reserves; follows US$750m May sukuk
Banque Saudi Fransi , which is part-owned by Credit Agricole, will issue up to SAR2.5bn ($667 million) in secondary sukuk, or Islamic bonds, after shareholders approved the move, the lender said on Tuesday.
The move is aimed at shoring up its supplementary capital reserves, or Tier 2 capital. Bonds and sukuk issued to raise Tier 2 capital are usually classed as subordinated debt, meaning they would be below secured creditors in the event of any restructuring.
"The board has agreed to... approve the issuance of secondary sukuk in an amount that does not exceed SAR2.5bn and for a period that does not exceed seven years, with the possibility of recovery after five years," the bank said in a statement to the bourse.
In May, Saudi Fransi priced a US$750m five-year sukuk at par amid strong investor demand. Pricing was at 185 basis points over midswaps and it attracted orders worth up to US$4bn.
The issue was the first sukuk sale under the lender's US$2bn programme.