State-run Saudi Telecom has issued $1.25bn in international sukuk, or Islamic bonds, the company said on Sunday.
The 10-year bonds – the first US dollar denominated sukuk issued by the company – have been arranged by HSBC, JPMorgan, Standard Chartered, Samba, First Abu Dhabi Bank and KFH.
Saudi Telecom’s new bonds, which will be listed on the Irish Stock Exchange, offer a 3.89 per cent return.
That yield is around 25 basis points higher than US dollar-denominated Saudi government bonds with a similar maturity, but around 8 points below international sukuk issued by state-owned Saudi Electricity Co.
Saudi Telecom – which is 70 per cent owned by Saudi Arabia’s Public Investment Fund – started marketing its debut sukuk on Thursday with an initial price guidance of around 155 basis points over midswaps. The final pricing was 20 basis points tighter.
Fund managers said the initial price guidance was “tight” but that the paper would have nevertheless attracted good demand given the low number of sukuk issues in the market and pent up demand from shariah-compliant buyers.
The bonds attracted $4.5bn in orders, Refinitiv’s IFR, a fixed income news service, reported.