Saudi Arabia lists largest ever sukuk on Irish Stock exchange

A drop in the oil price has contributed to Saudi Arabia’s budget deficit

The prospectus for Saudi Arabia’s sukuk issuance advises investors to note the adverse effect the low oil price is having on the economy. Photograph: AFP/Getty Images

The prospectus for Saudi Arabia’s sukuk issuance advises investors to note the adverse effect the low oil price is having on the economy. Photograph: AFP/Getty Images

 

Saudi Arabia has listed the world’s largest ever sukuk issuance through two listings on the main securities market of the Irish Stock Exchange (ISE), raising $9 billion (€8.27 billion).

The government issued a $4.5 billion bond maturing in April 2022 at 2.894 per cent and a $4.5 billion bond maturing in April 2027 at 3.628 per cent.

The arrangers of the sukuk include HSBC and JP Morgan while one of the dealers is Deutsche Bank.

The issuance has been listed through KSA Sukuk Limited, a special purpose vehicle incorporated in the Caymen Islands and wholly owned by the government of Saudi Arabia.

Oil sector

In the bond prospectus, investors are advised to note the adverse affect that the current low oil price is having on Saudi Arabia. “Sectors such as education, healthcare and housing may, indirectly, be adversely affected by lower levels of economic activity that may result from lower government revenues from the oil sector.”

The prospectus also warns investors of the fact that Saudi Arabia has seen its credit rating downgraded by both Fitch and Moody’s in the last 15 months, with both ratings agencies citing a fall in oil prices as the reason for the deterioration of Saudi Arabia’s credit profile.

Other gulf sovereign bond listings on the ISE include Kuwait, Jordan, Oman and Bahrain. “This confirms the Irish Stock Exchange’s popularity with sovereign and corporate issuers from the Middle East,” said Gerard Scully, director of international primary markets at the ISE.

Statistics released by the ISE show it lists over 29,000 bonds from 85 countries.