Saudi airports expansion: GACA set for fresh sukuk



JEDDAH: P. K. ABDUL GHAFOUR | ARAB NEWS STAFF

Published — Wednesday 25 September 2013

Last update 25 September 2013 3:50 am

| نسخة PDF Print News | A A

The General Authority of Civil Aviation will issue its second tranche of sukuk worth SR15 billion to finance expansion projects of King Abdulaziz International Airport (KAIA) in Jeddah and King Khalid International Airport (KKIA) in Riyadh.
“One of the major features of our sukuk is that it is fully guaranteed by the Saudi government through the Finance Ministry,” a GACA official said.
This is the authority’s second issue of Islamic sukuk after its successful SR15 billion debut issue in January 2012. He said the first issue was used to finance part of the SR27 billion KAIA expansion project.
The Saudi Arabian Monetary Agency has categorized GACA sukuk among bonds that have zero risk. SAMA plays an important role in organizing the issuance of GACA sukuk, he said.
The GACA official did not give details about the second issue but other sources estimated its value at SR15 billion.
GACA has reportedly picked three banks to organize the second tranche of sukuk.
GACA has chosen HSBC Holdings’ Saudi Arabian unit and the investment-banking arm of state-owned National Commercial Bank to manage the riyal-denominated transaction, banking sources said.
Saudi Arabia is investing heavily in infrastructure projects and revamping many of its airports to cater to growing passenger traffic.
Standard Chartered will also be involved in the transaction, having pitched jointly with NCB Capital, but will hold a more junior role than the other two banks. 
The GACA sukuk is expected to draw significant demand from Saudi investors especially because of government guarantee, one analyst said. Given that the Kingdom doesn’t issue sovereign debt, this is the closest that investors can get hold of government paper.
The last sukuk, a SR15 billion 10-year government-guaranteed deal priced in January 2012, was the country’s largest ever local currency bond and attracted orders from investors worth 3.5-times the final amount.
HSBC said it was happy to deal with the first tranche of GACA sukuk. “We are extremely proud and honored to be part of this historic transaction that is globally the largest single-tranche sukuk ever issued,” said Walid Khoury, CEO of HSBC Saudi Arabia.
Khoury added: ” Our dedicated team worked closely with the General Authority of Civil Aviation to meet all of their requirements and helped in setting another benchmark in sukuk issuance in the Kingdom.”
Fahad Al-Saif, director and head of debt capital markets at HSBC Saudi Arabia Limited, said the GACA sukuk issuance has conceptually set the new risk-free rate for the Saudi Arabian markets.
“We are always keen to help lead the development of Islamic financing industry and Saudi capital markets through innovative solutions.
This transaction stresses our integrated Islamic and innovative financing solutions capabilities which HSBC is committed to deliver in Saudi Arabia,” Al-Saif said about the first issue.
The KAIA project, which will increase the airport’s annual capacity to 30 million passengers, was scheduled to be completed by the end of 2014.
The KKIA project will increase its capacity to 35.5 million with the first phase costing SR1.26 billion. It will be ready by 2017.

What's happening around Saudi Arabia

RIYADH: The Ministry of Education has suspended all parallel education programs, except in medical and engineering specialties, as well as bridging programs for health diploma certificates.Education Minister Azzam Al-Dhakil gave directions to the rec...
RIYADH: The Cooperative Health Insurance Council said it had suspended operations of six medical insurance companies for violating health insurance regulations by issuing insurance policies without completing the required documentation and violating...
JEDDAH: A local survey found that almost half of Saudis abide by rules and laws in public places outside the Kingdom more than they do inside the country.More than one-third of the respondent sample said they violate road traffic signs and directions...
DAMMAM: A 50 percent decline in the prices of some types of fish in the Dammam Central Market was noted compared to the previous month.Fish sellers attributed this decline to an increased fish supply and fall in demand from hotels and consumers durin...
RIYADH: In a two-day operation, police arrested 343 beggars including women and children during the holy month of Ramadan.A police officer said the raid was carried out in the Salehiya district and 220 of those arrested were women from Ethiopia. “Mos...
RIYADH: Hotels in the capital have made special arrangements by setting up Ramadan tents, where diners can visit to begin and break their fast with special suhoor and iftar meals during the ongoing fasting month.As the Ramadan tent is a popular pheno...
JEDDAH: Kaddadin, or unlicensed transporters, say there is good money to be made during Ramadan especially in transporting Umrah pilgrims from Jeddah to Makkah and back.During this month the number of visitors doubles or triples which means the price...
RIYADH: The holy month of Ramadan is lively at night following Taraweeh prayers. Nights are turned into days during the month in the industrial area where there is a large concentration of automobile workshops.The industrial areas are well illuminate...
RIYADH: The Saudi man behind the green project that ensured 3,400 trees in Khurais in the Eastern Province for a government firm has been approached by a Kuwaiti oil company for a similar project. “After learning about the project in the Eastern Prov...
RIYADH: A total of 1,300 Gambian pilgrims will come to the Kingdom to perform Haj this year, Ambassador Omar Gibril Sallah said on Thursday.“We hope that the pilgrims will observe the fifth pillar of Islam in peace and harmony and may Allah accept th...
RIYADH: The Saudi Commission for Tourism and National Heritage (SCTNH) and the Disabled Children’s Association (DCA) have launched a traffic safety campaign, to reduce the number of accidents that cause disability.Prince Sultan bin Salman, the SCTNH...
JEDDAH: The holy month of Ramadan is a period when non-Muslim expatriates too abstain from eating, drinking or smoking during the daytime out of respect for Muslims who fast from dawn to dusk and also because it is healthy. The expatriates are also...
A policeman was killed in an anti-terror operation on Friday in the western city of Taif, according to the interior ministry. An exchange of fire resulted in the death of the policeman after a raid to arrest a wanted person, state news agency SPA quo...
RIYADH: Customs authorities at Prince Mohammed bin Abdulaziz International Airport in Madinah have foiled an attempt to smuggle 52,850 Xanax capsules into the country.The drug, an anti-depressant, banned in the Kingdom, was found hidden under the clo...
RIYADH: Custodian of the Two Holy Mosques King Salman has ordered that two men face trial for allegedly insulting the late King Abdullah.Quoting reliable sources, a local online publication said that King Salman has also barred Mohsin Al-Awaji and Ab...

Stay Connected

Facebook