October 22, 2019 / 8:09 AM / a month ago

Saudi Arabia hires JPMorgan, Standard Chartered for $2.5 bln sukuk

DUBAI, Oct 22 (Reuters) - Saudi Arabia has hired banks, including JPMorgan and Standard Chartered, to manage a $2.5 billion issuance of sukuk, or Islamic bonds, a document by one of the banks leading the deal showed.

The deal would be the kingdom's first international debt transaction since attacks on its oil facilities last month that initially halved Saudi crude production.

The strikes led to a rating downgrade by Fitch, which cited increased geopolitical risks and the possibility of further attacks.

The sale of the new sukuk notes, due in 2029, will be completed on Tuesday. The notes offer an initial profit rate equivalent to 145-150 basis points over mid-swaps, the document showed.

Saudi Arabia has borrowed extensively over the past few years to offset the impact of lower oil prices on state revenues.

This year it raised 3 billion euros ($3.3 billion) in its first bond sale in that currency and $7.5 billion in conventional bonds in January.

The new sukuk transaction would complete Riyadh's external funding requirements this year, according to the document.

JPMorgan and Standard Chartered are coordinating the deal with Aljazira Capital working as joint lead bank.

The Saudi ministry of finance did not immediately respond to a request for comment.

Separately, the government announced on Tuesday it had issued 7.265 billion riyals ($1.94 billion) in domestic sukuk.

$1 = 0.8973 euros Reporting by Davide Barbuscia

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