Saudi Aramco chooses hybrid sukuk structure for first debt issue
Saudi Aramco has chosen a commonly used hybrid structure for a domestic offer of SAR-denominated Islamic bonds for its first debt sale, according to the prospectus. At least 51% of the funds raised in the debt issue would be used in a Mudaraba agreement, a form of Islamic investment management partnership -- the money would be invested in Aramco's business and used for general corporate purposes. No more than 49% would be used in a Murabaha facility that would trade commodities with a special purpose vehicle. Foreigners may own the bonds, including those who are not resident in Saudi Arabia. The sukuk will be tradable through the stock exchange, but trading may not begin immediately after issue because a registry agreement with the exchange may not have been signed by then. The prospectus gave no indication of the planned pricing or size of the sukuk sale, but bankers said in February that they expected a deal of cSAR3-6bn (USD805mn to USD1.6bn). Aramco reportedly began meeting with potential sukuk investors on Wednesday and the sale may take place as early as next week. The issuance is part of a SAR37.5bn sukuk issuance programme established by Aramco.
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