Saudi Arabia is aiming to generate funds through the issuance of dollar-denominated sukuk ( Islamic Bond) to address fiscal deficits and support expenditures on Crown Prince Mohammed bin Salman’s economic diversification initiative.
The kingdom has enlisted banks for a three-part sukuk offering, comprising three-, six-, and 10-year notes, as reported by an anonymous source familiar with the matter due to confidentiality reasons.
The bonds are expected to offer yields ranging between 85 and 110 basis points above comparable US Treasuries.
Sukuk are often referred to as Islamic bonds, unlike conventional bonds that represent debt, sukuk represent ownership in a tangible asset, project, or investment activity.
Sukuk investors earn a portion of the profits generated by the underlying asset, rather than receiving fixed interest payments as in conventional bonds.
Sukuk comply with Islamic finance principles, which prohibit the payment or receipt of interest (riba), and instead promote risk-sharing and asset-backing in financial transactions.