IslamicFinance.de

Saudi developer Dar Al Arkan has lowered price guidance on its planned Islamic bond issue. The company, which is planning to raise at least $300 million from a five-year Islamic bond, revised its guidance lower to around 6 percent from initial yield guidance of 6.25 percent. An update from lead arrangers on Monday indicated that order books were over $500 million. Dar Al Arkan has picked Bahrain-based Bank Al Khair, Deutsche Bank, Emirates NBD, Goldman Sachs and Qatari pair Masraf Al Rayan and QInvest to arrange the potential sale.

Saudi Basic Industries Corp (SABIC), the world's biggest petrochemicals group, will issue a sukuk late this year or next year to fund coming projects. SABIC has 40 billion riyals ($10.7 billion) worth of projects over the next few years and the company prefers to fund these with sukuk. Its Chief Financial Officer Mutlaq al-Morished said the timing of the sukuk would depend upon both the development of the projects and conditions in financial markets. It is too early to give the size of the sukuk, he added.

Few Saudis are insuring their homes despite the recent floods and the relatively low-cost SR 5,000 annual premium per house on average. Sheikh Khaldoun Barakat, chairman of the board of directors of Arab Reinsurance Company, said current prices are “reasonable” and based on a house’s location, preparations to avoid risk and other factors.
He added companies and shops need to have insurance because there is a high risk of heavy losses if an accident or disaster occurs. Homeowners and businesspeople in Saudi Arabia are unaware of the importance of insurance against disasters. according to Barakat. Insurance experts said that government and the private sector should raise awareness of the importance of housing insurance.

The Capital Market Authority is finalizing a regulatory framework which will allow foreigners to directly own stocks in Saudi Arabia, though the market has no need for liquidity from international investors. Foreign investment is attracted to come to the market for the technical expertise and human capacity. Indications are that foreign appetite is strong to invest in the largest regional exchange, which could add greater depth and breadth to the market and ultimately benefit all participants, Furthermore, large institutional investors could push for greater disclosures and transparency which will pave the way for Saudi equities to be included in widely followed emerging markets indices. Following this, the next steps would be the introduction of new instruments such as REITs, options and warrants, and covered shorts. An efficient and well-regulated market should be the eventual goal.

Bahrain-based First Energy Bank (FEB) plans to build a $1 billion polysilicon production plant in Saudi Arabia with a local partner to cater to rising regional investments in solar power. The project is spearheaded by the strategic partner, FEB and the techno-commercial developer, Project Management and Development Company (PMD). It will cover a total area of approximately 375,000 square meters in Al Jubail Industrial City 2, and is expected to start production in 2013. The project will have a total production capacity of 7,500 tons per annum. It is expected that future expansion of the project facility (in second phase) would include investments in downstream sector. The project has achieved key milestones like the signing of the power supply agreement with Saudi Electricity Company (SEC).

Saudi Electricity Company (SEC) has issued the world's first international 30-year sukuk. The benchmark $2 billion deal is SEC's first sukuk offered to US and other international investors. More tan six-and-a-half times oversubscribed, the sukuk evidences strong international demand for longer-dated Islamic instruments. Although the debut bond has opened new vistas for Islamic finance, the number of companies eligible to take advantage of the precedent is unclear. In the short term, it is likely that only quasi-souvereigns will suceed in securing longer tenors.

The Saudi Capital Market Authority (CMA) board has approved Aljazira Takaful Ta’awuni Company’s (ATT) initial public offering (IPO) of 10,500,000 shares, representing 30 percent of its share capital, amounting to SR 350 million. The offer price will be SR 10 per share and the subscription period will be from May 13 to 19. ATT's chairman Abdulmajeed Al-Sultan said the step will improve the company’s financial position and enable it to realize its strategic objectives to become the local and regional leader of Shariah-compliant cooperative insurance. Despite being still under establishment, Aljazira Takaful Ta’awuni is considered to be one of promising companies in the cooperative insurance sector in Saudi Arabia.

Al Bayan Holding became the first Saudi Arabian company to issue an Islamic bond in Malaysian ringgit by issuing 200 million ringgit ($65.4 million) as the first tranche of a newly established 1 billion ringgit programme. Pricing details were not immediately available. Al Bayan issued the sukuk as a wakala. HSBC Holdings' Islamic unit in Malaysia, Hong Leong Islamic Bank, and Kenanga Investment Bank Bhd acted as joint lead managers on the deal, while Abu Dhabi's Al Hilal Bank was manager in the United Arab Emirates.

Sixty percent of Saudis save less than 10 percent of their monthly salary, according to a survey conducted by souqalmal.com. A recent report issued by Jadwa Investment confirmed that the Saudi consumer price index (CPI) inflation maintained the 3.9 percent year-on-year increase for the third consecutive month in March. According to the report, the main contributors to inflation are food and housing rent components. Financial experts have said Saudi families lack awareness on consumer consumption and financial management. Many reports confirm that Saudis are one of the highest spenders in the MENA region.

The Kuala Lumpur-based International Islamic Liquidity Management Corp (IILM) plans to issue $500 million through its sukuk programme in the second quarter of this year. The long-awaited announcement was overshadowed by the unexpected pull-out of Saudi central bank, selling its shareholding to Qatar and Malaysia. According to industry executives, the pull-out would not necessarily deter Saudi commercial banks from buying the IILM sukuk - and that even if it did, demand in other countries would be more than ample. A key factor will be the yield that the IILM sukuk pays versus the cost of funds at individual banks.

The Saudi Stock Exchange (Tadawul) announces that the suspension of Saudi Basic Industries Corp Sukuk 3 took place on Monday 15/04/2013 based upon the CMA approval of Saudi Basic Industries Corp. request to purchase (redeem) the SABIC SUKUK 3 issue. Accordingly, the SUKUK will be delisted from the Saudi Stock Exchange (Tadawul) on Wednesday 15/05/2013.

Saudi's Bank Aljazira has gotten the approval to sell shares in its insurance unit Aljazira Takaful Taawuni Co. The unit will offer 10.5 million shares at 10 riyals per share in IPO. Bank Aljazira plans to own 30 percent in the new firm. The new firm is to have capital of 350 mln riyals.

The CMA Board has issued its resolution approving the initial public offering of 10,500,000 shares, which represent 30% of Aljazira Takaful Ta’awuni Company’s share capital. The offer price will be SAR 10 per share, and the subscription period will be from 03/07/1434H (13/05/2013G) to 09/07/1434H (19/05/2013G). The prospectus will be published within sufficient time prior to the subscription period. The prospectus includes all relevant information that the investor needs to know before making an investment decision, including the company's financial statements, activities and management.

Announcing its interim consolidated financial results ended March 31, 2013, Al-Rajhi Bank stated that its net profit during the first quarter is SR 2.05 billion, representing an increase of 2 percent compared with the corresponding quarter of previous year. Total operating income for Q1 is SR 3.53 billion compared to SR 3.43 billion for the corresponding quarter of previous year, representing an increase of 3 percent. Net profit from financing and investments increased by 3.5 percent. Earning per share for the three months is SR 1.37 compared to SR 1.34 for the same period of previous year. The reason for the rise in profits in the current quarter compared with the same period of previous year is due to higher income from operation income.

The two-day Forum for Corporate Social Responsibility, where several issues of corporate social responsibility (CSR) in Saudi Arabia will be discussed, opened in Jeddah on April 9. Moreover, the names of the winning Saudi companies recognised for implementing social responsibility programs launched by the Chamber of Commerce last year will be announced at the forum. Several sessions tackle the different aspects of CSR, such as aligning business strategy and social responsibility programs, or linking youth social initiatives with funding sources and technical support.

The sukuk market had its eyes opened to an expansive new landscape this week, as Saudi Electricity Company defied the doubters to bring the first ever benchmark dollar 30 year tranche, writes Dan Alderson.

After years of giving away land to citizens, the Saudi Arabian government is left with almost no space of its own to develop in urban areas. That will delay building as the government chooses between buying back city plots whose price has been inflated by speculation or paying a premium to build in the desert. Saudi authorities plan to address the lack of available urban land as part of a national housing strategy that includes measures to combat land speculation and incentives to build. To meet its affordable housing needs, Saudi Arabia must either build in the desert or force urban landowners to develop their empty lots.

Achieving sustainability is the core of corporate social responsibility (CSR) worldwide, according to Tamkeen Company CEO Asya Al-Ashaikh. The focus is on interactions between the government and private sectors to boost CSR locally and create a Saudi CSR model, she added. Al-Ashaikh explained that CSR in the Kingdom needs to be led ideally by government entities. Moreover, CSR is not about donations and philanthropy but about corporates addressing socioeconomic and environmental issues based on their core competency, according to the Tamkeen CEO.

Sedco Capital, the Saudi Arabia-based asset manager, has launched an investment platform of Sharia-compliant funds aimed at high net worth investors and institutional investors. The Sedco Capital Global Funds platform, a Luxembourg Sicav, currently has a choice of seven investment funds with total assets under management of more than $1bn. The plan is for the platform to include over 15 funds totalling more than $1.6bn by the end of 2013.

The third edition of Saudi Corporate Social Responsibility Forum (CSRF) will be held in Jeddah from April 9-10.
The event is being organized by the Jeddah Chamber of Commerce & Industry (JCCI) at the Park Hyatt Hotel.
The winner of the CSRF Award recognizing best practices and initiatives in social responsibility will be announced at the forum, which will have the participation of a number of senior government officials, experts and businessmen from Saudi Arabia and elsewhere in the Arab world. The fórum is expected to review a number of key issues, especially the performance of Saudi companies in social responsibility programs.