Saudi Arabia anticipates major local currency issuances (By IFN)

Saudi Arabia anticipates major local currency issuances

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SAUDI ARABIA: Construction goliaths Saudi BinLadin Group and local dairy firm Almarai are set to organize roadshows in the following weeks as the two entities look to issue local currency Sukuk in the kingdom. Although the size of both the issuances have not been determined, banking sources predict the overall pricing for the Saudi BinLadin deal to be set at 2.5% over 150 basis points. According to market analysts, the Saudi Arabian Sukuk market is expected to be more vibrant this year compared to 2012 as issuers look to tap the high volumes of liquidity in the market. Last month, Saudi Aramco and Dow Chemicals also proposed a US$20 billion Sukuk to be issued via Sadara Petrochemical. The deal, which is currently pending approval from the Saudi Arabian Capital Market Authority will involve over 20 banks, with an even spread between local and international lenders. Latest data from KFH research shows that Saudi Arabia contributed to 9.3% of total global corporate Sukuk issuances last year, at US$3.4 billion, while issuances from the MENA region also grew by 34.4.% year-on-year to US$23.6 billion; led by the 278.2% year-on-year hike in issuances originating from Saudi Arabia totalling at US$10.5 billion. However, despite the encouraging figures and projections coming from the kingdom’s Islamic capital market space, secondary market trading still remains a major issue. Sukuk trading on the kingdom’s stock exchange, Tadawul has been zero to none since the 29th January, with only one trade on the 2nd February. The exchange’s Sukuk & Bonds Index has also remained stagnant since the 29th January this year, closing at 992.79 yesterday.