Innovations in Islamic Finance 2015: Saudi Telecom
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Innovations in Islamic Finance 2015: Saudi Telecom

SR2 billion sukuk programme

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Advisers: JP Morgan, NCB, Stanchart, Allen & Overy, Clifford Chance

The Saudi Telecom deal was an illustration of the growing sophistication both of Saudi Arabian borrowers and the markets within which they issue. Consider the fact that Saudi Electricity’s $2.5 billion 10 and 30-year Reg S/144a sukuk does not even make our list: scale and tenor like that from big Saudi Arabian borrowers is no longer remarkable.

There was a better case to include National Commercial Bank’s SR5 billion tier 2 subordinated sukuk, the largest ever bank issue from Saudi and the largest subordinated debt instrument from a bank in MENA, all of this despite being NCB’s debut in riyal debt markets.

Like everything else from Saudi these days, Saudi Telecom could make a claim just on size, pricing and the sense of a landmark: it is the first debut riyal deal to go to 10 years, the first Saudi telco to access the debt markets, and the tightest ever 10-year Saudi pricing.

But it makes our list too for a point of structural innovation. So far, most corporate sukuk in Saudi have used a combination of murabaha and mudaraba, but where all of the work of the structure is in the murabaha piece: this covers all the principal and profit payable under the sukuk.

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