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In a statement to the Tadawul, Saudi International Petrochemical Company announced the successful completion of a Shari’ah-compliant Sukuk issuance amounting to SAR 1.0 bn on 16 June 2016.
The Sukuk was priced at 235 bps over six-month SAIBOR for a tenor of five years maturing on June 16, 2021.
Eng. Ahmad Al-Ohali, Chief Executive Officer of Sipchem, commented that the successful completion of its second Sukuk offering will provide funding for general corporate purposes (including, without limitation, the repayment of any financial obligations). He expressed his appreciation to all who participated in the success of the Sukuk offering especially Riyad Capital and NCB Capital for their efforts in successfully managing the private issuance.
In a separate statement to the Tadawul, Sipchem also reported that with reference to the announcement to the market dated 12 May 2016 regarding the company’s intention to exercise its right of early redemption of its Mudaraba Sukuk with an aggregate amount of SAR 1.8 billion maturing on 6 July 2016, Sipchem successfully completed the early redemption of the Sukuk in full on 15 June 2016.

Bank Al Jazira has priced a 2 billion riyal ($533 million) sukuk issue that will boost the lender’s capital reserves. The bank priced the transaction at 190 basis points over the six-month Saudi interbank offered rate. The Islamic bond issue is structured with a ten-year lifespan but includes an option for the lender to redeem the sukuk after five years. It was arranged by GIB Capital as well as the bank’s own investment banking arm.

Saudi Arabia’s government is investigating the country’s banks for creating structured products which allow traders to speculate on the possible end of the currency’s US Dollar peg. Saudi officials continue to maintain that the country has no plans to devalue, and a number of political analysts say such a move would be a last resort. Saudi Arabia’s oil price driven crisis has seen the country’s budget deficit widening out to 19% of GDP. This caused a collapse in government spending which has slowed economic growth to near zero. A devaluing of the Riyal would increase oil revenues in Riyal terms and provide more domestic revenues for the government, but would make imports a lot more expensive.

Saudi Arabia may need to change its currency's peg to the U.S. dollar if economic conditions shift. The riyal's peg at 3.75 to the dollar has been a cornerstone of Saudi policy since 1986. But the collapse of oil prices since 2014, which created a $100 billion state budget deficit, has fuelled speculation in financial markets. Foreign bankers said Saudi authorities had explored the idea of changing the peg in a broad review of economic policy. They concluded that a change would be counter-productive now but conceivable in the far future.

In the face of plummeting oil prices, Saudi Arabia has announced an economic strategy to shake off Saudi overreliance on fossil fuels. In the 'Saudi Vision 2030' Deputy Crown Prince Mohammed bin Salman proposed changes to generate $100 bn in additional non-oil revenue by 2020. In order to do that, the 30-year-old monarch plans to restructure Saudi Aramco, the state oil company. Less than 5% of Aramco’s stake would undergo an initial public offering, with an expected value of $2 trillion. The ownership of the rest to the company would be transferred to Saudi’s sovereign wealth fund, known as the Public Investment Fund (PIF). Prince Mohammed also called for the private sector to grow to 60% from the current 40%. Government services like education, health care and airports will be transferred to the private sector. As the country adjusts to the transition, economic growth is expected to slow as private sector expands.

In March Saudi Arabia announced Vision 2030, a comprehensive reform plan aimed to wean Saudi Arabia off its long-term dependence on oil, sooner rather than later. The timing for these reforms is no accident. Large swings in global oil prices affect Saudi Arabia deeply, as the country’s oil export revenue stream determines its own financial strength. Saudi Arabia also faces other, wider challenges, with implications for the Kingdom have not yet fully been explored, such as its political succession.

Guidance Capital Markets announced it closed a three year Sukuk issuance for the Saudi Arabian conglomerate Al Bayan. The USD denominated Sukuk was issued last week through a private placement with three GCC banks, and was led by Guidance, who also acted as financial advisor to Al Bayan. The issuance is one of the first transactions of its kind, where a private conglomerate in KSA closed a USD dollar Sukuk through a private placement.

Bank Al Jazira will meet local fixed income investors this week for a sukuk sale which will improve its Tier 2. The transaction will likely run for ten years but includes an option to redeem the sukuk after five years. It is being arranged by GIB Capital, as well as the bank's own investment banking arm. Bank Al Bilad has chosen HSBC's Saudi Arabian arm to arrange its own Tier 2-enhancing sukuk issue. According to their respective financial statements, Bank Al Jazira's CAR was 15.83% at the end of 2015. At the same point, Bank Al Bilad's CAR was 15.88%.

The Islamic Research and Training Institute (IRTI) is organizing a seminar to discuss the role of Islamic microfinance in poverty alleviation on 14-15 May 2016 in Bogor, Indonesia. IRTI is organizing the event in conjunction with the 41st Annual Meeting of the IDB Group. The event features the launching of the Islamic Microfinance for Poverty Alleviation and Capacity Transfer (IMPACT) Program, which aims to disseminate the best practices in Islamic microfinance.

Saudi International Petrochemical Company (Sipchem) plans to recall a sukuk maturing on July 6 three weeks early. The firm will send a notice to sukuk holders informing them of its intentions and will use available cash to pay it off. It originally issued 1.8 billion riyals of sukuk in 2011. Sipchem also plans to issue a new sukuk and appointed Riyad Capital and NCB Capital as lead managers for the issue.

Leader of Russia’s Chechen Republic, Ramzan Kadyrov, is courting investment from Saudi Arabia. Kadyrov received a Saudi delegation in St Petersburg over the weekend, during which he discussed increasing the partnership between Chechenya and Riyadh. In January Kadyrov announced he is looking to open an Islamic bank, in order to attract investors from the United Arab Emirates and the Gulf.

Saudi Arabian Monetary Agency (SAMA) is expected to obtain a full membership at the Financial Action Task Force (FATF) in June 2018. At the 8th Compliance & Anti Money Laundering Seminar in Saudi Arabia SAMA Vice Governor Abdulaziz Al-Furaih said several new assessments have emerged including the set of recommendations by FATF and the MENA Financial Action Task Force (MENA FATF). Thomson Reuters Managing Director Nadim Najjar noted that compliance costs are set to increase in 2016.

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) holds on 4 May 2016 its International Conference, marking its 25th anniversary. Dr. Hamed Hassan Merah, Secretary General of AAOIFI said time is proper to revisit the 40 years history of the Islamic finance industry to evaluate its experience and contemplate the way forward.

National carrier Saudi Arabian Airlines (Saudia) has appointed HSBC as the lead arranger for a 5 billion riyal ($1.3 billion) sukuk issue. According to director general Saleh al-Jasser the sukuk would be sold in the second half of the year. Jasser said last month that the sukuk offering would finance fleet expansion, with the carrier aiming to operate 200 aircrafts by 2020.

The Council of Ministers presents Saudi Arabia’s vision for the future. Saudi Arabia will transform the Public Investment Fund into the world’s largest sovereign wealth fund. They will expand the variety of digital services to reduce delays and cut bureaucracy. Goals by 2030 include increasing non-oil government revenue from SR163 billion to SR1 trillion, raising the country's ranking in the Government Effectiveness Index from 80 to 20, raising the ranking on the E-Government Survey Index from a current position of 36 to be among the top five nations.

Fitch Ratings has downgraded the Long Term Issuer Default Ratings (LT IDRs) of seven Saudi Arabian banks. The affected banks are Al Rajhi Bank (ARB), National Commercial Bank (NCB), Riyad Bank (RB), SAMBA Financial Group (SAMBA), Saudi British Bank (SABB), Banque Saudi Fransi (BSF) and Arab National Bank (ANB). At the same time Fitch has revised the Outlooks on Saudi Hollandi Bank (SHB), Saudi Investment Bank (SAIB), Alinma Bank (Alinma) and Bank Aljazira (BAJ) to Negative from Stable, while affirming their ratings.

The Saudi Capital Market Authority Board approved the Investment Accounts Instructions after publishing the Draft Instructions on the CMA's official website for 30 days, and reviewing the concerned and interested parties' comments and observations. The Investment Accounts Instructions comprise 17 articles regarding several aspects of investment accounts such as the mechanism on how to accept clients, availability of specific data to open an investment account and instructions of opening and operating the investment account. The Instructions also include the specifications to open investment accounts.

Saudi's Alkhabeer Capital has released the 2016 edition of its report reviewing GCC governments’ budgets. The report analyses the latest budgets of the region’s governments, the recent reform measures announced and the broader, long-term implications of the political will to improve efficiencies, curb wasteful expenditures and instill fiscal discipline. Citing the emergence of government imperatives in the region to refocus budget priorities and reduce extravagance, Alkhabeer’s report expects expenditure levels in the GCC to reflect a cautious stance on spending as the region adopts unprecedented measures to counter the plunge in oil prices since June 2014.

National carrier Saudi Arabian Airlines (Saudia) is seeking to raise 5 billion riyals ($1.3 billion) via the first tranche of a sukuk isuance programme in the second or third quarter of this year, its director-general Saleh al-Jasser said. The funds will be used to finance fleet expansion, as the carrier aims to operate 200 aircraft by 2020. Details of the second tranche of the sukuk programme have not been determined, he added. The airline has been spinning off units in the last several years; it is now preparing documentation to hive off its cargo unit in an initial public offer of shares, Jasser said without giving details.

Bank AlJazira achieved a new reward as the best Arabian donor in 2015 during the “Non-Governmental Giving Foundations in Arabian countries” conference held in Bahrain. The award was received by the Executive Director of the Community Service Programs Dr. Fahad Bin Ali Al-Olayan on behalf of the Chief Executive Officer Mr. Nabil Al-Hoshan. The award was presented by the “Regional Network for Social Responsibility” in collaboration with the United Nations Industrial Development Organization “UNIDO”; Bank AlJazira has been chosen for this award by the conference committee.