Monday 23 October 2017

Saudis pick Dublin for record Islamic Finance bond deal

An investor walks past a screen displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia
An investor walks past a screen displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia

Gretchen Friemann

Saudi Arabia listed its biggest ever sharia-compliant bond, known as a sukuk, on the Irish Stock Exchange yesterday, cementing Dublin's reputation as a centre for liquid securities.

The oil-rich Kingdom raised $9bn from the issuance, which forms part of a wider pipeline of mega-bond sales from the Middle East in the past year as falling commodity prices eat in to state coffers.

Saudi Arabia has led the charge to international debt markets with the issuance last year of its debut $17.5bn sovereign bond, which also floated on the ISE.

Falling oil prices, ballooning budget deficits and the desire to diversify finances are fuelling the rush to debt markets.

That in turn has delivered a fillip to the ISE, which vies with the Luxembourg bourse in its effort to dominate the European market for listed bonds.

Its importance as a revenue earner is tipped to grow over the next five years as investors gravitate to the greater transparency and regulatory oversight afforded by listed debt instruments.

But Saudi Arabia's decision to list its two-tranche sukuk, structured to comply with Islam's ban on usury, also represents a strike at London's reputation as a hub of Islamic finance. The UK carved out a niche in this corner of the market when it became the first Western country to issue an Islamic bond.

The sukuks listed on the ISE were split in to five- and ten-year maturities, and pay investors 2.89pc and 3.63pc respectively. Dubai developer Dumac Properties also used the ISE to list a $500m sukuk recently.

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