IslamicFinance.de

Saudi Arabia plans a new Islamic bond issue in a sale that could come as early as February. The sharia-compliant sukuk will form part of a pipeline of bond sales to finance the kingdom’s budget deficit and invest in economic diversification away from oil. Last year, Saudi Arabia set a record for developing countries with its first sovereign bond sale, attracting $67bn in investor bids for a $17.5bn issue. Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings, said diversification is natural for any emerging market, but the fall in oil prices have made it a necessity for exporters like Saudi Arabia. Lower oil prices have led to a drop in government reserves held in banks, which in turn has had an impact on their willingness to lend, so they have to look for alternative sources of financing.