The Saudi Binladin Group (SBG) issued a SR700 million ($187 million) Islamic bond or Sukuk on July 12 through a private placement to Saudi investors as the Jeddah-based company expands its operations. The Sukuk was offered to Saudi sophisticated investors and issued through Saudi BinLadin Sukuk Co., was more than 2.5 times oversubscribed, lead manager HSBC Saudi Arabia said in a statement on Saturday. The Sukuk had a zero coupon on a discount-to-maturity basis, it added. SBG will invest 105 million euros ($136 million) to more than quadruple output at a Senegalese oil refinery, Qasim Al-Shaikh, the oil and petrochemical unit chief, said May 1. The group is also bidding to develop the first phase of an airport in Madina. SBG said in a statement “the issue has attracted attention from a wide cross section of qualified investors including corporations, mutual funds, government agencies, insurance companies and individuals. We believe that this strong response to our second Sukuk issuance is a reaffirmation of our investor's faith in SBG and is a testimony to SBG's position as a leading Saudi Arabian business conglomerate playing a substantive role in Saudi Arabia's infrastructural growth and development.” Walid Khoury, CEO of HSBC Saudi Arabia, said “having led SBG's debut Sukuk issuance in 2008, we are proud to have brought their second Sukuk issuance to the market as well. This Sukuk contains several important innovations and provides a well-structured short term, domestic investment alternative to investors in Saudi Arabia.” He added that “it is as such, an important step in the continuing development of the Saudi Arabian debt capital markets.” He noted that “considering Saudi local market conditions and investors' preferences, the development of commercial paper in Saudi will enable corporate short term funding requirements to diversify away from bank sources.” The Sukuk Al-Murabaha has attracted the highest number of sophisticated primary investors among any Sukuk ever issued in Saudi Arabia and is expected to prove to be an attractive alternate financing source to support local issuer requirements.
