Saudi opens books for 5-year, 10-year debut Islamic bonds

Saudi Arabia opened books for its first dollar-denominated Islamic bond, people familiar with the matter said, as the country seeks to plug a budget deficit caused by a collapse in oil prices.The government plans to sell the five-year sukuk in the 115 basis points area over mid-swaps and a 10-year tranche at a spread of about 155 basis points, the people said, asking not to be identified because the information is private. Saudi Arabia has been hit by a drop in oil prices, prompting the kingdom to cut spending, raise debt and prepare what may be the world’s largest initial public offering of state-owned oil company Saudi Aramco. The country plans to raise between $10bn and $15bn from international bond markets this year and sell about 70bn riyals ($19bn) locally, said Mohammad al-Tuwaijri, secretary-general of the Finance Committee at the Royal Court in December.Citigroup, HSBC Holdings and JPMorgan Chase & Co are joint global coordinators for the sukuk, while BNP Paribas, Deutsche Bank and NCB Capital are helping to manage the sale.