Dar Al Arkan sukuk raises $600m

The order book for Saudi real estate investor Dar Al Arkan’s Islamic bond (sukuk) sale – the first since the start of the Iran war – exceeded $1.5 billion, driven by regional and international investors.

The developer raised SAR2.25 billion ($600 million) through the sale, which is to be used for general corporate purposes.

The five-year sukuk has a profit rate of 7.25 percent per annum, the company said in a statement to the Saudi stock exchange.

In an interview with Arabic news channel CNBC Arabia, chairman Yousef Al Shelash said the company will use the proceeds to explore new opportunities and develop existing projects.

He said that major banks in the Gulf and Saudi Arabia were issuing sukuk at a profit rate of 6.5 percent before the Iran war.

Dar Al Arkan has had 14 previous issuances from 2004 to date, but none have been restructured, Al Shelash said.

The developer launched two projects this year in Riyadh and Jeddah, valued at SAR40 billion, the chairman said, which require stable cash flows and strong liquidity to develop infrastructure and superstructure.

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The company mandated 12 regional and global banks from Kuwait, Qatar, the UAE, the US and the UK for the latest sukuk.

AGBI reported that a sell-off in US, European and Japanese sovereign debt has caused a renewed slump in Gulf government bond prices, although spreads remain unchanged as investors shrug off the impact of the Strait of Hormuz blockade on state energy revenue.

Dollar-denominated Gulf sovereign bond prices have been volatile since the Iran war started, tumbling to milestone lows in mid-March before rebounding steadily to peak around April 21.