By Souhail Karam
'Sukuk could be one way of financing trade in Saudi Arabia' - SEK executive director.
Sweden's Export Credit Corporation (SEK) said it may issue Islamic bonds or tap other sharia compliant financial instruments to boost trade with Saudi Arabia, its biggest trade partner in the Middle East and Africa.
A delegation from SEK met Saudi banks including Alinma , Al Rajhi and Banque Saudi Fransi to discuss the plan but no decision has been made yet, said Mans Hoglund, an executive director at SEK.
Speaking to Reuters, Hoglund said: "They have been receptive to the idea ... One of the way of financing trade in Saudi Arabia could be sukuk."
These instruments could also involve sharia compliant letters of credit for Saudi firms, he added.
He declined to elaborate on the potential size of the financing envisaged by SEK.
The Saudi government is spending $400 billion in the five years to 2013 to mainly build universities, hospitals, railways and boost power generation, presenting foreign trade partners with a rare window of opportunities amid the global crisis.
The growth of Swedish exports to Saudi Arabia slowed to about 1 percent in 2009 from 20.4 percent in 2008 after the global crisis hit Saudi demands for goods and services, said Marcus Wenestam, who heads the Swedish Trade Council in Saudi Arabia.
At $1.32 billion in 2009, Swedish exports to Saudi Arabia - which consist mainly of ores and engineering products - accounted for almost 1 percent of the Scandinavian country's total exports, against 0.8 percent in 2008, Wenestam said. (Reuters)