Saudi Telecom issues $1.25bn debut sukuk

Saudi Telecom — which is 70 percent owned by Saudi Arabia’s Public Investment Fund — started marketing its debut sukuk on Thursday. (Reuters)
Updated 11 May 2019

Saudi Telecom issues $1.25bn debut sukuk

  • The 10-year bonds — the first US dollar denominated sukuk issued by the company — have been arranged by HSBC, JPMorgan, Standard Chartered, Samba, First Abu Dhabi Bank and KFH
  • Saudi Telecom’s new bonds, which will be listed on the Irish Stock Exchange, offer a 3.89 percent return

DUBAI: State-run Saudi Telecom has issued $1.25 billion in international sukuk, or Islamic bonds, the company said on Sunday.
The 10-year bonds — the first US dollar denominated sukuk issued by the company — have been arranged by HSBC, JPMorgan, Standard Chartered, Samba, First Abu Dhabi Bank and KFH.
Saudi Telecom’s new bonds, which will be listed on the Irish Stock Exchange, offer a 3.89 percent return.
That yield is around 25 basis points higher than US dollar-denominated Saudi government bonds with a similar maturity, but around 8 points below international sukuk issued by the state-owned Saudi Electricity Co.
Saudi Telecom — which is 70 percent owned by Saudi Arabia’s Public Investment Fund — started marketing its debut sukuk on Thursday with an initial price guidance of around 155 basis points over midswaps. The final pricing was 20 basis points tighter.
Fund managers said the initial price guidance was “tight” but that the paper would have nevertheless attracted good demand given the low number of sukuk issues in the market and pent up demand from shariah-compliant buyers.
The bonds attracted $4.5 billion in orders, Refinitiv’s IFR, a fixed income news service, reported.


British Airways burning through cash, CEO urges unions to engage

Updated 04 June 2020

British Airways burning through cash, CEO urges unions to engage

  • Job losses necessary as cash reserves of IAG, British Airways’ parent company, would not last forever

LONDON: The boss of British Airways said its parent company IAG was burning through $223 million a week and could not guarantee its survival, prompting him to urge unions to engage over 12,000 job cuts.
British Airways came under heavy attack from lawmakers in parliament on Wednesday, who accused it of taking advantage of a government scheme to protect jobs while at the same time announcing plans to cut its workforce by 28 percent.
Planes were grounded in March due to coronavirus restrictions, forcing many airlines to cut thousands of staff as they struggle without revenues. Airlines serving Britain now face an additional threat from a 14-day quarantine rule.
In an internal letter to staff seen by Reuters, Alex Cruz, the chief executive of British Airways said the job losses were necessary as IAG’s cash reserves would not last forever and the future was one of more competition for fewer customers.
BA also wants to change terms and conditions for its remaining workers to give it more flexibility by, for example, making all crew fly both short and long-haul.
Cruz said IAG, which also owns Aer Lingus, Iberia and Vueling, was getting through $223 million a week, meaning that it could not just sit out the crisis. The group had €10 billion of liquidity at the end of April.
“BA does not have an absolute right to exist. There are major competitors poised and ready to take our business,” Cruz said in the letter.
He urged two unions which represent cabin crew and other staff, GMB and Unite, to join in discussions to mitigate proposed redundancies. Pilots union BALPA is “working constructively” with the airline, he added.
Cruz also joined other airline bosses in criticizing Britain’s quarantine rule, due to come into effect on June 8, calling it “another blow to our industry.”