#1- Bank Albilad is gearing up to issue USD-denominated additional tier 1 (AT1) sukuk through a private placement to shore up its capital base, according to a bourse filing. The issuance will be conducted under the bank’s USD 2 bn AT1 capital sukuk program. The final value and terms of the sukuk will be determined based on market conditions at the time of issuance.

SOUND SMART- AT1 sukuk are perpetual, high-yield instruments that count toward a bank’s core capital, offering loss-absorbing features. They are typically used by GCC banks to optimize capital structure, comply with Basel III requirements, and fund future expansion.

ADVISORS: The bank enlisted our friends at HSBC as joint lead managers on the transaction, alongside Albilad Capital, Goldman Sachs International, and Emirates NBD.

#2- Tadawul-listed and modular building solutions firm Red Sea International Company is set to debut a SAR 100 mn murabaha sukuk under its murabaha sukuk program, the company said in a regulatory filing. The offering will be made available to investors via the debt instrument platform operated by Tarmeez Capital Financial Company, which is acting as the sole lead arranger. The prospectus will be published on Tarmeez’s website at a later date.

The proceeds will be earmarked to ramp up working capital and fund capital expansions tied to the company’s operational activities and investments, in line with a financing study it recently conducted.

SOUND SMART- A murabaha sukuk offering is basically a shariah-compliant bond where investors fund the purchase of goods or assets, which are then sold to a buyer at a premium. The buyer pays back over time, and that premium becomes the investor’s return. Since it’s based on a sale and not interest, it follows Islamic finance rules.

Tags: