Saudi Arabia launches domestic sukuk offer in three tranches

Saudi Arabia on Sunday launched its first offer of riyal-denominated sukuk with maturities of five, seven and ten years, Reuters reported citing a document.

The five-year sukuk were offered at yields ranging between 2.90 percent and 3.00 percent, seven-year between 3.25 percent and 3.35 percent, and ten-year between 3.55 percent and 3.65 percent.

No further details were provided by the Saudi finance ministry about the issuance size. Earlier on Sunday, the ministry said it has finished establishing a riyal-denominated sukuk program, which was then submitted to the Capital Market Authority (CMA), the Kingdom's market regulator.

Local commercial bankers, however, told Reuters that they expected an issue of about SAR 10 billion, with which the market could cope easily since liquidity had improved since last year.

Bids can be submitted by investors until 2 pm local time on Monday.

The ministry said last week that 13 domestic banks had qualified to participate in the sukuk issues.

Finance minister Mohammed Al-Jadaan told Al Arabiya television earlier this month that local currency sukuk issues, designed to help Riyadh cover a large budget deficit caused by low oil prices, would begin this month.

In 2015, Saudi Arabia issued local currency bonds to cover budget deficit amid a slump in oil prices, however, it suspended them late in 2016 due to strained liquidity in the banking system.