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Saudi’s SAAD set to price Islamic bond: arranger

MANAMA - Saudi Arabia’s SAAD Group is set to price its five-year benchmark Islamic bond at 80 to 85 basis points above the London Interbank Offered Rate, a source at arranging bank BNP Paribas said on Tuesday.

“The initial guidance is 80 to 85 points over LIBOR,” the source said. “The final prices will be set tomorrow or Thursday.”

Benchmark size generally means at least $500 million.

Moody’s Investors Service, which assigned a Baa1 rating to the Islamic bond, or sukuk, said SAAD Group would lease land in Saudi Arabia to Golden Belt, a Bahrain-based special purpose vehicle which is selling the bonds.

Standard & Poor’s gave the sukuk a BBB+ rating.

SAAD Group, which works in construction and real estate, said in a statement it was raising funds to finance various projects since the acquisition of a stake worth 3.3 billion pounds ($6.6 billion) in HSBC Holdings HSBA.L.

Maan al-Sanea, who owns Khobar-based SAAD Group, said in a British regulatory filing last month that he owned a 3.1 percent stake in HSBC, Europe’s biggest bank, through Singularis Holdings, an investment company based in the Cayman Islands.

Islamic bonds are typically backed by physical assets that pay a dividend or rent to bondholders rather than interest, which Islam equates with usury.

Sanea owns 90 percent of SAAD Group and his wife, Sana al-Gosaibi, owns 10 percent, Moody’s had said in a statement.