Saudi Arabia raises $9 bn in first global Islamic bond issue

Saudi raises $9 bn in first global Islamic bond issue. (AFP)
Updated 13 April 2017
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Saudi Arabia raises $9 bn in first global Islamic bond issue

RIYADH: Saudi Arabia raised $9 billion in its first global Islamic bond issue, the government announced on Thursday, a move analysts say could ease pressure on foreign reserves.
The sale of Islamic bonds, known as sukuks, comes after the kingdom in October turned to the conventional global debt market for the first time, raising $17.5 billion in a bond issue.
Saudi Arabia has also sold domestic bonds and drawn on its accumulated reserves, all in an effort to reform the economy and address budget deficits caused by a collapse in oil revenues since 2014.
“The ministry of finance received significant interest for the first international issue of the sukuk program with an order book from investors in excess of $33 billion,” the official Saudi Press Agency said.
There will be two tranches of $4.5 billion, one maturing in 2022 and another in 2027, reflecting “the strong fundamentals of the Saudi economy,” it said.
Islamic financial instruments including sukuks are structured to comply with Islamic law, which does not allow the payment of interest.
Riyadh has forecast a budget deficit of $53 billion this year, after an even bigger shortfall last year prompted subsidy cuts and delays in major projects.
In a report this month, Saudi firm Jadwa Investment said the kingdom’s foreign reserves, including securities, bank deposits and gold, had fallen to a near six-year low.
Reserves dropped to $514 billion in February, down $10 billion from the previous month and the lowest level since August 2011, Jadwa said.
“Any new international sovereign bond, or indeed sukuk issuance, should alleviate the pressure on foreign exchange reserve withdrawals,” the researchers said.


Barclays payments to Qatar would have been ‘unacceptable’ to market, London court hears

Updated 1 min 32 sec ago
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Barclays payments to Qatar would have been ‘unacceptable’ to market, London court hears

  • The UK Serious Fraud Office alleges that four bankers agreed to pay £322 million in secret fees to Qatar
  • It is claimed that Barclays agreed to pay Qatar more than double the standard 1.5 percent investment commission and hid this from other investors

LONDON: Former Barclays Chairman Marcus Agius could not remember if he was told the bank was paying higher fees to Qatar than other investors during an £11.2 billion ($14.6 billion) fundraising in the depths of the 2008 financial crisis, a London court heard on Tuesday.

However he said that paying such commission to one set of underwriters and not the other would have been “unacceptable to the market.” Agius is not accused of any wrongdoing.

He was the first witness to testify in the trial of four former Barclays executives, who include the then CEO John Varley.

“I would have wanted to understand why it would’ve been necessary,” he told the court.

The UK Serious Fraud Office alleges that the four bankers agreed to pay £322 million in secret fees to Qatar.

During the fraud trial — which began in January — the prosecution told the court that the then Qatari Prime Minister Sheikh Hamad bin Jassim demanded a personal fee for investing in Barclays.

It is claimed that Barclays agreed to pay Qatar more than double the standard 1.5 percent investment commission and hid this from other investors by making the payments through what prosecutors alleged were bogus Advisory Services Agreements, or ASAs, Southwark Crown Court heard.

Agius also told the court that he feared resignations from the board in 2008.

“Any one of them might have said, ‘This wasn’t what I signed up for, how do I get out of here?,’” he said.

“I’m clear that in June 2008 we at Barclays did not anticipate how much worse things were going to get. I don’t think we thought it was going to go as badly as it ultimately did.”