SAUDI ARABIA: Banque Saudi Fransi (BSF) has hired three banks to arrange roadshows for its debut US dollar-denominated Sukuk, as Saudi’s Sukuk market shows rapid development with a diversification from local currency papers.
Citibank, Credit Agricole S.A. and Deutsche Bank were hired to arrange the roadshows for BSF, starting on the 7-11th May 2012 in Malaysia, Saudi Arabia, Singapore, the UAE and the UK. The Saudi bank is marketing a US$2 billion Sukuk program, the issuance of which will likely follow the roadshows, subject to market conditions.
Law firm Baker & McKenzie advised BSF on the establishment of the program, listed on the London Stock Exchange.
Saudi’s burgeoning Sukuk market has grabbed headlines this year since the General Authority for Civil Aviation kicked off the market with its US$4 billion offering in January. Data from Dealogic shows that Sukuk from Saudi Arabia amounted to US$5.5 billion in the last 12 months as at the 1st May; just over double the amount issued in the 12 months to the 4th May 2011.
Sales of Saudi riyal-denominated Sukuk have also surged during the same period, amounting to SAR4.7 billion (US$1.25 billion) against SAR2.1 billion (US$559.95 million). However, US dollar Sukuk offerings continue to lag behind local currency Sukuk, as Saudi corporates continue to shy away from borrowing in the US dollar markets.
Nonetheless, recent sales such as Saudi Electricity Company’s US$1.75 billion program, which saw US$17.5 billion-worth of orders, suggest investors remain hungry for top quality issuances from the kingdom.
As BSF readies its landmark offering, hotly watched as it is a conventional bank offering a Shariah compliant instrument, Saudi’s Sukuk market appears set for unstoppable growth ahead.