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Saudi bank plans $850m sukuk issue

JEDDAH: Saudi-based Islamic Development Bank (IDB) plans to issue Islamic bonds, or sukuk, in the first half of next year worth around $850 million, a senior official said yesterday.

"The size will be determined by the demand for resources (from member countries)... I am expecting it to be within the same size of the previous issuance," IDB vice-president Abdul-Aziz Mohamed Al Hinai said.

In September IDB, the Saudi based triple-A lender, which funds projects in Muslim member countries, sold the first tranche of a $1.5 billion sukuk, a $850m sukuk which was priced at 40 basis points over mid-swaps.

"Definitely the pricing change is on the positive side so we are aiming of getting an even better pricing than the last sukuk," Al Hinai said.

The bank is issuing sukuk as part of a $6bn Islamic bond programme to soften the impact of the financial crisis on its 56 member countries, many of them are poor. Last year, it granted loans to poorer member states worth $4.8bn.

A roadshow for the new sukuk would target Asian markets such as China and Japan as the Middle East and some Western countries, he said, without being more specific.

"We are studying the currency, tenure, and the place of issuance. Because in the past we have issued in non-member countries ... we hope that it will be in one of the member countries this time," Al Hinai said.



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