The Kingdom of Saudi Arabia’s $5.5 billion dual-tranche sukuk was notable above all for the way it translated a complex Shariah structuring exercise into a benchmark sovereign financing.
The transaction was the Kingdom’s first Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)-compliant sukuk issued under its newly established ijarah sukuk programme, creating a framework intended to meet the requirements of Islamic investors that can only participate in AAOIFI-compliant structures. That mattered because the programme had to be shaped not only around religious compliance but also around the legal and regulatory requirements of multiple jurisdictions.
The deal came to market in September 2025, with five-year and 10-year tranches, initially guided at US Treasury (UST)+95 basis points and UST+105bp respectively. Demand built quickly, with the orderbook exceeding $15 billion by late morning in London and peaking at more than $17.5 billion. This allowed Saudi Arabia to tighten pricing by 30bp on both tranches, setting final spreads at UST+65bp for the five-year and UST+75bp for the 10-year. The issuer ultimately raised $2.25 billion in the five-year tranche and $3.2 billion in the 10-year tranche.
The programme had to be shaped not only around religious compliance but also around the legal and regulatory requirements of multiple jurisdictions
Investor distribution also underlined the strategic value of the new structure. A sizeable portion of final allocations went to Asia, supporting Saudi Arabia’s diversification objectives, while the majority was placed with international investors rather than domestic accounts. Banks and private banks were especially prominent in the five-year tranche, while fund managers took a larger share of the 10-year tranche.
HSBC acted as joint global coordinator, joint lead manager and bookrunner on the transaction.
