Thamer_Abdullah Alhumud

Al Rajhi Bank Issues USD1 Billion Sustainable Sukuk 

Al Rajhi Bank, one of the world’s largest Islamic lenders, successfully raised $1 billion through the sale of 5-year sustainable Islamic Bonds or ‘sukuk’, according to a document from arranging banks released on Tuesday. 

The issuance attracted substantial investor interest, with orders exceeding $2.8 billion, leading to the narrowing of the spread for the U.S. dollar-denominated sukuk to 90 basis points (bps) over U.S. Treasuries from the initial 120 bps, as stated in the document. 

A consortium of major financial institutions, including Al Rajhi Capital, ADCB, ADIB, Citigroup Global Markets, DIB, Emirates NBD Capital, FAB, Goldman Sachs International, HSBC Bank, KFH Capital Investment, SMBC Nikko Capital Markets, Société Générale, and Standard Chartered Bank, acted as joint lead managers & bookrunners for the debt transaction. Additionally, Standard Chartered Bank served as the sole sustainability structurer. 

Proceeds from the sukuk issuance will be utilized to fulfill Al Rajhi Bank’s financial and strategic objectives in accordance with a sustainable finance framework, as disclosed in a bourse filing. 

This announcement follows closely after the recent $2 billion sukuk sale by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, indicating a growing trend towards sustainable financing in the region. 

Al Rajhi Bank’s issuance comprised 5,000 sukuk sold at $200,000 per unit, according to the bourse filing. The sukuk, with a maturity of five years and an annual yield of 5.047%, are scheduled to be settled on 12 March 2024. 

Thamer Abdullah Alhumud (pictured) is currently serving Chief Governance and Legal Officer at Al Rajhi Bank.