Bank Al Jazeera: Sukuk raises SR 1 billion in first issuance

Bank Al Jazeera (BAJ) has announced that the closure of its first sukuk issue had netted a total amount of SAR 1 billion.

It was the first debt capital market transaction in Saudi Arabia this year, with all operations being Shariah- compliant. 

In a press release issued here, it said this issuance has met with great success and attracted a large number of investment sectors. As a result, the amount invested exceeded its expectations by 500% of the initial  target that was fixed. 

Bank Al Jazeera had applied to the Saudi Arabian Monetary Agency (SAMA) for permission to raise SR 750 million to SAR 1 billion through issuance of its first sukuk in response to  the demand. As it turned out, the sukuk  was  oversubscribed by more than  four times following the approval received from SAMA.

The private sector pitched in with about   80% of the subscription amount raised through sukuk , which reflects the  growing confidence in the national economy and also the lure of sukuk  as  an attractive option in terms of Islamic banking.

The subordinated Sukuk is based on a Mudaraba and Murabaha structure that was approved by the Shariah Committee of BAJ which is a fully Shariah- compliant bank. 

There is a high level of investor confidence in Sukuk (Islamic bond), which makes it an  attractive investment  avenue in the local market. At  the same time, it will enhance  BAJ’s credit rating and its ability to tap lucrative business opportunities in the market.  Issuance of sukuk  as part of the investment portfolio has also been recognized  as a valuable  asset  in banking , finance and investment sectors. For this reason, it  has become popular as an investment option in various international banks when it comes to upgrading the E –Banking  services.

It also  serves to  create  new programs that seek directly the  client needs and market requirements, such as real estate investment , personal finance program, as well as small and medium enterprises financing besides treasury products with  their unique advantages. 

"We value investors’ trust in the bank and we take this massive demand as a message to continue our growth journey and work harder to meet and exceed our stakeholders' objectives," said Mr. Taha Alkuwaiz, BAJ Chairman said. He thanked HSBC Saudi Arabia Ltd. and J.P. Morgan Saudi Arabia Ltd. for their efforts in managing the Sukuk issuance as well the  Bank's Shariah Board and investors for their confidence, which contributed to the success of this issuance.

On his part, the executive Chairman of BAJ , Nabil Alhoshan, expressed his appreciation of the investors for their participation in this successful issuance, noting that the order book was highly diversified between government entities, banks, insurance companies, fund managers, and corporates and that the private sector subscribed about 80% of the Sukuk.