Saudi Arabia

UPDATE 1-Saudi bank NCB selling 2 bln riyal sukuk -sources

Saudi Arabia's National Commercial Bank (NCB) is selling a 2 billion riyal ($533.3 million) sukuk as part of its plans to raise capital. The offer, which enhances the bank's Tier 1 - or core - capital and is compliant with Basel III banking regulations, is the third such transaction by NCB since June, and is part of a plan to raise as much as 7 billion riyals of capital before the end of 2015. In the same way as the previous two issues, the latest sukuk is structured with a perpetual tenor but with a clause in the documentation which allows the bank to redeem the Islamic bond after a certain date. NCB Capital is acting as sole arranger. The transaction will be privately placed with one or more government-owned investment funds.

Saudi Arabia’s Almarai to issue 2 bln riyal sukuk

Saudi Arabian dairy producer Almarai will issue a senior sukuk of up to 2 billion riyals ($533 million) to help finance investment plans, it said on Tuesday in a statement published on the bourse website. The sukuk will be offered to local investors and is subject to market conditions, it said in its statement, adding it had mandated HSBC Saudi Arabia and Samba Capital and Investment Management Co to act as joint lead managers.

Ijmal to build a world-class Sharia compliant portfolio of real-estate developments

Saudi's Ijmal LLC has hired Shariyah Review Bureau (SRB), to help achieve Sharia Compliance in all its business activities. In this role, SRB will lead and oversee the company's Sharia compliant operations with global standards. Ijmal was incorporated in 2014 by Al Deghaither Group, Al-Othaim Holding, ICD and Nizwa Bank. Ijmal partners with real estate developers through a hybrid structure that incentivizes developers to achieve better quality products. Ijmal started its operations targeting developments located in Riyadh, Jeddah, Dammam and Khobar. So far, Ijmal has partnered with one developer building 68 sea-front apartments in Kohbar Saudi Arabia.

INTERVIEW-Former Saudi official presses for change in managing oil wealth

Khalid Alsweilem, a former senior official at Saudi Arabia's central bank says he believes the kingdom may soon change the way it manages its oil wealth as part of efforts to protect its financial reserves in an era of cheap crude. The Saudi Arabian Monetary Agency ( SAMA ) manages the vast bulk of petrodollars earned by the world's top oil exporting country; net foreign assets at the central bank totalled $664.5 billion in June. Alsweilem, who managed the assets as chief investment officer at SAMA , argues the arrangement is dangerous because the finance ministry can draw freely on the reserves when it wants to cover budget deficits caused by periods of low oil prices.

Saudi's Othaim Malls targets up to 1 bln riyal debut sukuk issue - sources

Saudi Arabia's Al Othaim Real Estate and Investment Co, owner of five shopping malls in the kingdom, is marketing a five-year debut sukuk issue which could raise up to 1 billion riyals ($267 million) for the company. The firm, also known as Othaim Malls, is part of Al Othaim Holding, a family-owned conglomerate which includes listed food retailer Abdullah Al Othaim Markets Co. Othaim Malls launched the transaction last week, with pricing earmarked at between 165 basis points and 175 basis points over the six-month Saudi interbank offered rate. Part of the proceeds will be used to fund its expansion plans.

Challenges and Opportunities for the Wealth Sector in Saudi Arabia 2015, New Report Launched

Market Research Reports, Inc. has published the research report “Challenges and Opportunities for the Wealth Sector in Saudi Arabia 2015” on their website The report focuses on HNWI performance between the end of 2010 and the end of 2014. This enables us to determine how well the country's high net worth individuals (HNWI) have performed through the crisis. This report is a thorough analysis of Saudi Arabia's Wealth Management and Private Banking sector, and the opportunities and challenges that it faces. The report also includes comprehensive forecasts to 2019.

The National Commercial Bank (NCB) announces the successful completion of subordinated tier 1 Sukuk by way of private placement

The National Commercial Bank ( NCB ) has successfully settled an issuance of subordinated Additional Tier I capital Sukuk, in the amount of SAR 2 Billion, and compliant with Islamic Sharia principles through a private placement offer in Saudi Arabia. Sukuk issuances such as this are intended to strengthen the Bank's capital base in accordance with the Basel III framework and sustain its growth while maintaining healthy capital adequacy levels. Additionally, the Sukuk will continue to extend the maturity profile of NCB 's liabilities while continuing to diversify its sources of funding. NCB Capital Company acted as sole Lead Manager.

Bank Aljazira reclassifies revenue from property disposal

In a statement to the Tadawul, Bank Aljazira has issued a correction to its financial results for H1 2015. Originally the bank had stated total operating income for Q2 of SAR 612 million. However, after reclassifying gains from the disposal of land, Bank Aljazira says total operating income for Q2 was SAR 1.184 billion. At first the bank had classified the gain of SAR 573 million on the disposal as non-operating income. The gain has now been reclassified as operating revenue on the recommendation of the bank’s external auditors.

Junk-rated sukuk top market on Saudi housing shortage

Demand for housing in Saudi Arabia is translating into a rush for some of the lowest-rated Islamic debt in the six-nation Gulf Cooperation Council. Three sukuk from Dar Al Arkan Real Estate Development Co are among the five best-performing Shariah-compliant bonds in the region this year. The company’s notes due May 2019 returned 8.2% through July 21, compared with an average 2.1% for the GCC sukuk market. The gains underscore efforts by Saudi Arabia’s King Salman to stoke construction amid an estimated shortfall of 2mn homes. The securities have been helped by a clamour for high-yielding assets as the US Federal Reserve prepares to raise interest rates for the first time since 2006.

Islamic Development Bank announces $150 billion over next 15 years to fund Sustainable Development G

The Islamic Development Bank (IsDB) announced that it will increase its funding of SDG related activities through its ten year strategy framework, from $80 billion recorded during the MDGs, to $150 billion over the next 15 years (2016-2030). IsDB made the announcement on the sidelines of the United Nations’ Third International Conference on Financing for Development, in Addis Ababa 13-16 July. Islamic finance can serve as a strong and non-traditional source of financing the Sustainable Development Goals (SDGs) according to global experts speaking during a seminar organised by the IsDB. Johannes Majewski, Program Coordinator, GIZ, the German Corporation extolled the strength of Islamic finance through its emphasis on asset based financing and its focus on common welfare.

Arab National Bank wins approval for 2 bln riyal sukuk

Saudi Arabia's Arab National Bank has received regulatory approval to raise 2 billion riyals ($533.28 million)through sukuk which will enhance its supplementary capital. The kingdom's seventh-largest lender by assets will privately place the Tier 2 sukuk with a tenor of 10 years although it allows the issuer to redeem the security after five years. Arab National Bank joins a string of Saudi Arabian banks that have sought to replenish their capital reserves in the last couple of years by issuing capital-boosting bonds and bonus shares following a period of strong lending growth. Capital reserves are high in Saudi Arabia due to the kingdom's conservative regulatory standards.

Saudi Takaful Build Houses for Orphans

Struggling to elevate the standard of living among orphans, the Takaful Welfare Society for Orphan Care in Madinah has announced a new project to build residential units for orphans in the holy city. According to the Takaful program, 195 residential units will be built for families of orphans in Madinah and its villages over a period of three years and 300 houses will be repaired. With the cost of around SR40 million, it is estimated that one unit will cost around SR180,000 for construction and SR20,000 for repairs. Besides, the society announced the Madinah Al Munawwara Award for Social Responsibility under the auspices of Prince Faisal bin Salman to support best projects for orphans.

$32-Billion Pledge by Saudi Prince Reflects Gateses’ Influence

Saudi Arabia's billionaire Prince al-Waleed bin Talal repeatedly invoked the name Bill Gates this week when he pledged his entire $32-billion fortune to charity. He also cited Warren Buffett, who has pledged his wealth to the Gates foundation. The Saudi and the American philanthropists are already collaborating on an effort to eradicate polio, among other things, the prince noted. His foundation, Alwaleed Philanthropies, will focus on empowering women and youths, providing disaster relief, eradicating disease, and bridging cultures both inside and beyond the Arab world. The work will be conducted in communities regardless of religion, a decision the prince defended more than once during his news conference. He described the timeline for his philanthropy as "open-ended".

Saudi prince promises to forgo his fortune and more

Saudi Prince Alwaleed bin Talal announced Wednesday his plan to give away his entire fortune in the coming years. Educated in California, Alwaleed is thought to be the 20th-richest person in the world, according to Bloomberg, with a fortune of $30.5 billion. He has pledged to give away even more than that, $32 billion, though no time frame was set. Alwaleed’s charity group, Alwaleed Philanthropies, has worked with the Bill & Melinda Gates Foundation and the Carter Center, founded by Jimmy Carter. Alwaleed cites among his causes: health promotion, electricity to remote villages, building orphanages and schools, disaster relief and empowering women. Some have suggested that his emphasis on charity and women’s rights is a tactic to endear his ventures to Westerners. However, few deny his generosity.

The Capital Market Authority Approves Alinma Tokio Marine Company Request to Increase its Capital by way of Rights Issue

Alinma Tokio Marine Company submitted a request to the CMA to approve its capital increase by way of rights issue valued at SAR 250,000,000. The capital increase will be approved in the Company's extraordinary general assembly meeting, which will be determined by the Company’s board of directors at a later date and should be held within six months from the approval date. CMA's Board of Commissioners has issued its resolution approving Alinma Tokio Marine Company’s capital increase request, which is to be conducted in accordance with the tradable rights framework. The rights issue prospectus will be posted and made available to the public at a later time. Investors should carefully read the prospectus, which includes detailed information on the company, the offering and risk factors.

Saudi carrier takes 50 Airbus planes in Islamic leasing deal

Saudi Arabian Airlines will take delivery of 50 aircraft from Airbus in the largest aviation deal to be secured via Islamic financing. Airbus announced the deal at the Paris Airshow earlier this month, which includes 30 A320neo planes and 20 A330-300 Regional aircraft worth around $8.2 billion based on list prices. Dubai-based International Airfinance Corporation (IAFC), an Airbus-backed sharia-compliant aircraft leasing fund, will buy the aircraft and lease them to Saudi Arabian Airlines, it said in a statement. IAFC, which exclusively finances Airbus aircraft for clients in the Middle East, Asia and Africa, was launched in June last year with seed capital from Airbus and the Jeddah-based Islamic Development Bank. The fund appointed Dubai-based Palma Capital and Quantum Investment Bank as arrangers to complete the deal, which consists of both equity and debt financing.

Fitch Affirms Islamic Development Bank at ‘AAA'; Outlook Stable

Fitch Ratings has affirmed the Islamic Development Bank (IsDB)’s Long-term Issuer Default Rating (IDR)’s at ‘AAA’ with a Stable Outlook. The Short-term IDR has been affirmed at F1+. The trust certificates issued by IDB Trust Services Ltd and guaranteed by IsDB have also been affirmed at ‘AAA’. The ratings reflect its strong capitalisation, high liquidity and low concentration risk compared with other regional multilateral development banks (MDBs). Even though some limits, such as leverage, have been relaxed, the risk framework remains stringent, and IsDB is progressively aligning it with that of other highly rated MDBs, for example through its liquidity policy. However, compared with other ‘AAA’-rated MDBs, provisioning is fairly low given the bank’s exposure to countries experiencing deep political troubles.

Saudi lender NCB raises 1 bln riyal capital-boosting sukuk

Saudi Arabia's National Commercial Bank (NCB) has announced the sale of a capital-boosting Islamic bond, raising 1 billion riyals ($267 million) through a sukuk which will enhance its core capital. The kingdom's largest bank said on Monday the privately-placed sukuk, which would boost its Tier 1 capital, was Basel III-compliant and had a perpetual tenor, although the bank would have the right to call the sukuk on a predefined date. However, it did not disclose the call date in the bourse filing announcing the transaction. JP Morgan and NCB Capital, the investment banking arm of NCB, were the deal's arrangers. NCB joins a string of Saudi Arabian banks that have sought to replenish their capital reserves in the last couple of years, by issuing capital-boosting bonds and bonus shares.

Saudi Binladin prices $267m sukuk issue

Saudi Binladin Group, one of the kingdom's largest construction firms, has priced an Islamic bond with a 364-day tenor worth 1 billion riyals ($267 million). The transaction, arranged by the investment banking arm of Gulf International Bank and BNP Paribas' Saudi unit, was priced with a profit rate of 2.5 percent. The funds from the issue will reportedly be used to finance costs related to its work at the King Abdulaziz International Airport in Jeddah. Binladin is the main contractor for the project, which aims to increase the airport's capacity to handle 80 million passengers annually by 2035. The terms of the sukuk are the same as those on the company's last Islamic bond offer in July 2013, which was arranged by the same banks.

Where Did the Saudi Sukuk Go?

King Salman has reorganised his cabinet, removed princes from government roles, merged ministries and realigned succession since ascending to the throne in January. Half a year into his reign, Saudi companies have yet to market a single security in 2015, making it the country’s quietest start for Islamic sales in nine years. The inactivity in Saudi Arabia comes as more financial centres seek to compete in the sukuk market. Saudi Arabia is pursuing a $130 billion spending plan to diversify its economy away from oil, and has vowed to invest in major infrastructure projects. King Salman’s changes will impact many areas, especially financial markets. The country’s economy may expand 2.5 per cent this year, after growing at an average rate of 5.4 per cent in the previous four years.

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