News Column

Saudi bank completes $533m sukuk

June 6, 2014

Dubai



Saudi Investment Bank (Saib) has completed a SR2 billion ($533.3 million) capital-boosting sukuk issue, it said yesterday, the latest lender in the kingdom to offer such an instrument to enhance its reserves.

 

The subordinated Islamic bond, which boosts Tier 2 supplementary capital, has a 10-year lifespan and includes an option for the bank to buy back the paper after five years, a statement to the Saudi bourse said.

 

Pricing of the instrument was at 145 basis points over the six-month Saudi interbank offered rate (Saibor), said a report in the Gulf Daily News (GDN), our sister publication.

 

The offering will support the bank's capital base in accordance with Basel III requirements, assist its future growth and diversify funding sources.

 

Saib, the kingdom's eighth-largest lender by assets, is the latest bank in Saudi Arabia to issue a capital-boosting sukuk.

 

While lenders in the kingdom have high capital ratios compared with Western banks, thanks to the regulator's conservative stance, a period of sustained lending growth has led many banks to sell such instruments to strengthen their reserves. - TradeArabia News Service

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Source: TradeArabia


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