The senior unsecured US dollar-denominated sukuk carries a yield of 4.75% per annum, as reported in a Tadawul regulatory disclosure on Thursday. The bank issued 5,000 bonds, each with a par value of $200,000.
The proceeds from the issuance will be utilized to achieve the bank’s financial and strategic objectives in line with its Sustainable Finance Framework. Al Rajhi Capital, Citi, Emirates NBD Capital, Goldman Sachs, HSBC, JPMorgan, KFH Capital, and Standard Chartered have acted as joint lead managers and book-runners for the bond sale.
Sustainable finance has gained momentum in recent years as more organizations seek to align their financial activities with environmental, social, and governance (ESG) goals. Al Rajhi Bank’s sustainable sukuk issuance demonstrates its commitment to supporting sustainable development and responsible investment practices.
As one of the leading banks in Saudi Arabia, Al Rajhi Bank plays a pivotal role in the country’s financial sector. The successful issuance of this sustainable sukuk helps the bank meet its strategic goals. It contributes to the broader development of the Islamic finance market, which has been growing steadily worldwide.
Islamic finance is based on the principles of Shariah, which prohibit the charging or paying interest and require that tangible assets back financial transactions. Sukuk, often called Islamic bonds, are structured to comply with these principles, ensuring that investments are ethically sound and financially rewarding.
According to some industry reports, the global Islamic finance market has witnessed considerable growth in recent years, with total assets estimated to exceed $3 trillion by 2025. This growth has been fueled by increasing demand for Shariah-compliant financial products and services from Muslim-majority countries and investors seeking ethical and sustainable investment opportunities.
Saudi Arabia has been at the forefront of this growth as it seeks to diversify its economy and reduce its dependence on oil revenues. The government has introduced various measures to support the growth of the Islamic finance sector, including regulatory reforms, infrastructure development, and the promotion of financial literacy.
The success of Al Rajhi Bank’s $1 billion sustainable sukuk issuance is likely to encourage other financial institutions in the region and beyond to explore similar opportunities. As the Islamic finance market grows and matures, investors can expect to see more sustainable and socially responsible investment options become available.
In conclusion, Al Rajhi Bank’s $1 billion sustainable sukuk issuance marks a significant milestone in the development of the Islamic finance market, both in Saudi Arabia and globally. By leveraging the principles of Shariah to support sustainable development and responsible investment practices, the bank is contributing to the growth of a more inclusive and resilient financial system. As the market continues to expand, more organizations are expected to follow Al Rajhi Bank’s example and embrace sustainable Islamic finance as a viable and attractive investment option.
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