Banque Saudi Fransi To Complete SAR2bn Sukuk By End-June

Banque Saudi Fransi (BSF), the Kingdom’s fourth-largest listed lender, will complete a SAR2 billion($533 million) capital-boosting sukuk issue by the end of this month, banking sources said on Tuesday.

Pricing of the trade, which will boost the bank’s Tier 2 – or supplementary – capital, is at 140 basis points over the Saudi interbank offered rate (Saibor), three sources said, speaking on condition of anonymity as the information isn’t public.

The lifespan of the Islamic bond is 10 years but it has a clause which allows the bank to repay the deal after five years, two of the sources said. One of them added that order books were scheduled to close at the end of this week, and the transaction would likely complete in the days after that.

Sources told Reuters last month the bank planned a SAR2 billion deal by end-June, which would be arranged by its own investment banking arm, Saudi Fransi Capital.

The bank didn’t respond to an emailed request for comment.

BSF’s sukuk is the latest capital-boosting Islamic bond sale from a bank in the Kingdom. Saudi lenders have high capital ratios compared to Western banks, due to the regulator’s conservative stance, but a period of sustained lending growth has led many to strengthen their reserves.

Saudi Investment Bank said last week it had completed a SAR2 billion sukuk with the same 10-year, non-call five, lifespan as BSF’s. It priced the Islamic bond at 145 bps over six-month Saibor.

BSF’s total capital adequacy ratio at the end of March, which combines both Tier 1 – or core – and Tier 2 capital, and is a key indicator of the bank’s financial health, stood at 15.57 per cent, down from 16.29 per cent at the same time last year, according to its latest financial statement.