Saudi Arabia chooses hybrid structure for debut dollar sukuk

April 7, 2017

Jeddah, Apr 7: Saudi Arabia has chosen a hybrid structure for its debut international sukuk, the prospectus for the offer showed, a format widely used in the Saudi local debt market, but not the most popular for sovereign issues.

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The Islamic bond, expected to go up to $10 billion, will be the country’s second international debt sale after a $17.5 billion conventional bond in October last year. That bond issue, the largest ever sold across emerging markets, was part of an effort to diversify Saudi Arabia’s funding sources to plug a budget deficit caused by lower oil prices.

Saudi Arabia will soon start meeting fixed income investors for the sukuk, a dual-tranche Islamic bond with five- and 10-year maturities.

An amount equal to 51 percent of the bond proceeds will be used in a mudaraba agreement, a form of Islamic investment management partnership. The remaining 49 percent of the proceeds will be used under a murabaha facility by the trustee, a Cayman Islands-incorporated company called KSA Sukuk Limited, to purchase Shariah-compliant commodities, the prospectus said.

Such a hybrid structure, which replicates the riyal-denominated sukuk offer launched by oil giant Saudi Aramco earlier this month, is common in the Saudi local currency debt market. A different lease-based (ijara) sukuk structure has been the most commonly used by countries raising money via international debt issuances.

A hybrid structure might be too complex for some international investors to the point of possibly testing their appetite for the deal, bankers told Reuters last week.

Citigroup, HSBC and JP Morgan are the global coordinators mandated to arrange investor meetings ahead of the sukuk offering. They are joined by BNP Paribas, Deutsche Bank and NCB Capital as lead managers and bookrunners.

In a separate development, sources said Saudi Aramco had raised SR11.25 billion ($3 billion) in its debut sukuk issuance.

The Islamic bond, part of a program to raise SR37.5 billion, is the oil giant’s first fundraising exercise aimed at diversifying revenues that have been hit by low global oil prices.

The floating rate local currency sukuk has a seven-year maturity and offers 25 basis points over the six-month Saudi Arabian Interbank Offered Rate (SAIBOR).

Saudi Aramco’s debut deal is likely to be followed soon, possibly as early as next week, by the dollar-denominated Saudi sovereign sukuk.

Saudi Aramco did not immediately respond to a request for comment.

Saudi Aramco started collecting orders for its debut issuance on March 27, a document issued by banks leading the deal showed.

The order books for the transaction should have closed on April 9, according to the original timeline. But bookbuilding was extended by a day because some accounts needed extra time to obtain internal approvals.

Alinma Investment, HSBC Saudi Arabia, NCB Capital and Riyad Capital were the coordinators of the Aramco deal, joined by GIB Capital, Samba Capital and Saudi Fransi Capital in dealer roles.

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News Network
April 14,2024

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Tehran: Iran’s Islamic Revolution Guards Corps (IRGC) has launched “extensive” retaliatory missile and drone strikes against the occupied territories in response to the Israeli regime’s terrorist attack of April 1 against the Islamic Republic’s diplomatic premises in the Syrian capital Damascus.

The Corps announced launching the strikes in a statement on Saturday night, defining the mission as "Operation True Promise."

“In response to the Zionist regime’s numerous crimes, including the attack on the consular section of Iran’s Embassy in Damascus and the martyrdom of a number of our country’s commanders and military advisors in Syria, the IRGC’s Aerospace Division launched tens of missiles and drones against certain targets inside the occupied territories,” the statement read.

Iran's Defense Minister Brigadier General Mohammad Reza Ashtiani, meanwhile, warned that “Whatever country that could open its soil or airspace to Israel for a [potential] attack on Iran, will receive our decisive response.”

The Israeli attack had resulted in the martyrdom of Brigadier General Mohammad Reza Zahedi, a commander of the IRGC's Quds Force, his deputy, General Mohammad Hadi Haji Rahimi, and five of their accompanying officers.

The terrorist attack drew sharp condemnation from senior Iranian political and military leaders, who vowed "definitive revenge."

During a speech in Tehran on Wednesday after leading the Eid al-Fitr prayers, Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei said the Israeli regime “must be punished and will be punished” for the deadly strike on the Iranian diplomatic premises.

The Leader added, “The evil Zionist regime committed another mistake ...  and that was the attack on the Iranian consulate in Syria. The consulate and diplomatic missions in any country are considered to be the territory of that country. When they attack our consulate, it means they have attacked our soil."

In a subsequent statement, the IRGC said the retaliation came after 10 days of "silence and neglect" on the part of the international organizations, especially the United Nations Security Council, to condemn the Israeli aggression or punish the regime in line with Article 7 of the UN Charter.

Iran then resorted to the retaliatory strikes, the Corps added, "using its strategic intelligence capabilities, missiles, and drones" to attack "targets of the Zionist terrorist army in the occupied territories, successfully hitting and destroying them."

The statement, meanwhile, warned the United States -- the Israeli regime's biggest supporter -- that "any support or participation in harming Iran's interests will result in a decisive and regrettable response by the Armed Forces of the Islamic Republic."

"Furthermore, America is held responsible for the evil actions of the Zionist regime, and if this child-killing regime is not restrained in the region, it will bear the consequences," it noted.

The Corps concluded the statement by cautioning third countries against letting their soil or airspace be used for attacks against the Islamic Republic.

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News Network
April 17,2024

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Russian President Vladimir Putin says Iran’s “tactful and wise” response to Israeli aggression on its consulate in Syria was the best way to punish the aggressor.

Putin made the remarks in a phone conversation with President Ebrahim Raeisi on Tuesday.

“What the Islamic Republic of Iran did in response to what happened criminally and in the light of the inaction of the [UN] Security Council, was the best way to punish the aggressor and represented the tactfulness and rationality of Iran's politicians,” Putin said.

The Russian president said the Israeli regime’s “terrorist act” against the Iranian consulate in Damascus was against all international standards and rules.

He also strongly criticized the United States and certain Western countries for creating tension in the region. “We believe that the Islamic Republic of Iran is one of the main pillars of stability and security in the region.”

“We firmly declare that we will respond to any action against Iran's interests with greater force and broader and more painful than the previous [response],” President Raeisi said in the phone call.

The Iranian president also said Tehran's response to the Israeli regime was within the framework of international law, saying Israel’s terrorist act was a clear violation of international law and a serious threat to global peace.

“The destructive role of the US and some western countries and the inaction and inefficiency of international institutions, including the United Nations and the Security Council, in dealing with the aggressive action of the Zionist regime in attacking the Iranian consulate in Syria caused the Islamic Republic of Iran to exercise its right to self-defense.”

Raeisi further thanked Moscow for its “principled and constructive” stance against the Israeli aggression in Damascus. 

He appreciated the diplomatic efforts of the Russian government to thwart the conspiracies of the United States and certain Western countries in the UN Security Council.

“To those countries that have adopted double standards in the face of the crimes of the Zionist regime and express concerns about escalating tensions in the region, we advise them to rather stop supporting the Zionists genocide and crimes against the oppressed Palestinian people to preserve peace and stability in the region,” Raeisi said.

Iran’s Islamic Revolution Guards Corps (IRGC) launched extensive missile and drone strikes against the occupied territories late on April 13 in response to Israel’s missile attack on the consular section of the Iranian embassy in Damascus.

Operation True Promise has inflicted damage on Israeli military bases across the occupied territories. The extent of damage is yet to be specified. 

Brigadier General Mohammad Reza Zahedi, a commander of the IRGC Quds Force, his deputy, General Mohammad Hadi Haji Rahimi, and five of their accompanying officers were assassinated in the Israeli attack on Iran’s diplomatic mission.

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News Network
April 11,2024

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The head of the political bureau of Hamas says Israel’s assassination of his children will not make the Palestinian resistance group back down on its goals and demands in the latest round of talks aimed at reaching a truce in the Gaza war.

Ismail Haniyeh made the remarks in a phone interview with Qatar-based Al Jazeera TV network on Wednesday night, after an Israeli airstrike killed three of his sons — Hazem, Amir and Mohammad — and four grandchildren in the al-Shati refugee camp in the northern Gaza Strip. 

“Our demands are clear and specific and we will not make concessions on them. The enemy will be delusional if it thinks that targeting my sons, at the climax of the negotiations and before the movement sends its response, will push Hamas to change its position,” he said.

The Israeli military and the regime’s so-called internal security service, Shin Bet, confirmed killing Haniyeh’s sons, who were visiting relatives on the occasion of Eid al-Fitr before their vehicle was struck.

The assassination came at a time when Hamas was preparing a response to Israel’s proposal for a Gaza ceasefire delivered through mediators during the negotiations in Cairo.

Also in his remarks, Haniyeh said killing his sons would only make Hamas “more steadfast in our principles and adherence to our land.”

The resistance group, he added, would “not surrender, and […] not compromise […] no matter how great our sacrifices are.”

The Hamas leader also noted that around 60 members of his family, including nieces and nephews, have been martyred during the Gaza onslaught. 

“All our people and all the families of Gaza have paid a heavy price in blood, and I am one of them,” he said.

Haniyeh further decried Israel’s brutality in Gaza, saying the regime is conducting a war of ethnic cleansing and genocide on the besieged territory.

“There is no doubt that this criminal enemy is driven by the spirit of revenge and the spirit of murder and bloodshed, and it does not observe any standards or laws,” he stressed.

Erdogan extends condolences to Haniyeh

Türkiye’s President Recep Tayyip Erdogan has extended his condolences to Haniyeh over the deaths of several of his family members, the Turkish Communications Directorate said.

During the phone call on Wednesday, Erdogan said that Israel will be held accountable before the law for its crimes against humanity.

In addition, Turkish Vice President Cevdet Yilmaz condemned the attack and conveyed his condolences to Haniyeh.

”The Israeli administration will eventually be held accountable for these inhumane attacks under international law,” Yilmaz said on X.

Israel waged its bloody US-backed war on Gaza on October 7 after Hamas carried out its historic operation against the usurping entity in retaliation for the regime's intensified atrocities against the Palestinian people.

So far, the occupying regime has killed at least 33,482 Palestinians, mostly women and children, and injured 76,049 others.

Ansarullah’s reaction

Meanwhile, the Yemeni Ansarullah resistance group extended its condolences to Haniyeh.

“These great sacrifices … indeed strengthen the steadfastness of Palestinian people in the face of Israeli arrogance,” Ansarullah spokesman Mohammed Abdul-Salam stated.
On the threatened invasion of the city of Rafah in southern Gaza, Haniyeh said, “We will not submit to the occupying regime’s intimidation, as those who surrender will not be spared.”

Shati is the third-largest refugee camp among the eight in the Gaza Strip, and also one of its most crowded, with thousands of people living in an area of less than half a square kilometer.

Ismail Haniyeh, who now lives in Qatar, is originally from Shati camp.

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