AL KHOBAR: Riyad Bank, Saudi Arabia's third-largest lender by market value, sold an Islamic bond worth four billion riyals ($1.07bn) through a private placement, it said in a bourse filing yesterday.
The bank priced the issue at 0.68 per cent over the three-month Saudi interbank lending rate. The sukuk has a lifespan of seven years but can be called - or repaid - by the bank at the end of the fifth year.
The sukuk, a rare offering from the bank, will be used to diversify its funding sources, extend the maturity of its funding and support the financing of Sharia-compliant business, the statement added.
Riyad Bank is the latest Saudi lender to issue a riyal-denominated sukuk, tapping into a highly liquid local investor pool to secure cheaper, longer-term finance that would be hard to obtain through the loan market.
Many banks have issued or plan to issue Islamic instruments to boost their capital following a period of significant lending growth in the kingdom.