Saudi banking sector boosted by flurry of debt, sukuk issuances

14/01/2025 04:31 AST

Saudi Arabia's banking sector is experiencing a surge in activity in debt and sukuk markets as leading financial institutions move to strengthen their capital bases and fund strategic growth initiatives.

Al Rajhi Bank, Banque Saudi Fransi, and Arab National Bank are among the key players announcing substantial issuances to tap local and international investors.

This wave in activity supports the Capital Market Authority's objective of transforming the Kingdom's investment market into a key pillar of the its economy, as outlined in Vision 2030. The plan emphasizes expanding financing options, promoting funding opportunities, and attracting international investors.

Al Rajhi Bank unveiled plans to issue US dollar-denominated additional Tier 1 capital sustainable sukuk under its international sukuk program established in April.

The issuance, approved by the bank's board in March, will be executed through a special purpose vehicle and offered to eligible investors both within Saudi Arabia and abroad, according to a statement on the Saudi stock exchange.

The bank has enlisted a consortium of leading financial institutions, including Citigroup, HSBC, and Goldman Sachs, as joint lead managers and bookrunners for the proposed issuance.

Banque Saudi Fransi similarly announced its intention to issue US dollar-denominated certificates under its Trust Certificate Issuance Program. The initiative follows a board resolution granting executive management the authority to oversee the program and carry out issuances as needed.

"The issuance is expected to be through a special purpose vehicle and by way of an offer to eligible investors in the Kingdom of Saudi Arabia and internationally," a statement said.

HSBC will serve as global coordinator, and several prominent institutions, including Japanese-based bank holding company Mizuho and Saudi Fransi Capital, acting as joint lead managers.

Meanwhile, Arab National Bank has opted for a Saudi Riyal-denominated additional Tier 1 capital sukuk.

The private placement, valued at SR11.25 billion ($2.9 billion), aims to bolster the bank's capital base while supporting general corporate purposes. HSBC Saudi Arabia and ANB Capital Co. have been appointed as joint lead managers for the issuance.

The developments highlight the growing momentum in the Kingdom's financial markets as banks look to diversify funding sources and enhance their capital adequacy.

By prioritizing sustainable finance and investor protection, Saudi Arabia is aligning with international standards and leveraging its leadership in Islamic finance to attract a broader range of investors.

The CMA's strategy seeks to expand the debt instruments market to 24.1 percent of gross domestic product by 2025 by implementing regulatory reforms, improving market accessibility, and streamlining issuance processes.

Arab News