Bank Alkhair jointly led the Sukuk Programme, which is based on the Islamic Wakala structure. The Programme was established to fund Dar Al Arkan’s current and upcoming development projects. Bank Alkhair also acted as the Shari’ah Advisor of the Programme.
The first issue, a benchmark sized, five-year, Regulation S issue (Reg S), was offered to the market on Monday, the 20th of May, 2013. The Sukuk, which offers investors a coupon of 5.75%, received an overwhelming response from regional and international investors and was significantly oversubscribed. Dar Al-Arkan opted to close the first issue at $450 million despite it being almost four times oversubscribed, with overall book order reaching up to $1.68 billion.
Bank Alkhair, Deustche Bank, Goldman Sachs and Emirates NBD Capital were the joint book runners of the transaction.
“We are pleased at the positive response we received from the international financial community. The oversubscription of the issue demonstrates increasing investor appetite for Sukuk and for quality issuers like Dar Al Arkan,” Ikbal Daredia, Head of Bank Alkhair’s Global Capital Markets division, said.
“The success of this Sukuk issue given the continued adverse global economic climate is a testament to investor confidence in Dar Al-Arkan’s solid business model and Saudi Arabia’s robust economy,” Shaikh Yousef Al-Shelash, Chairman of Dar Al-Arkan, said.
Standard & Poor’s Ratings Service is expected to assign a rating of ‘B+’ to the issue. Standard & Poor’s recently affirmed Dar Al-Arkan’s B+ credit rating and revised its outlook to positive from stable due to the Company’s resilient operating performance.
The Sukuk, which was issued through the Dar Al-Arkan Sukuk Company Ltd., marks Dar Al-Arkan’s fourth international Sukuk issue to date. The Company previously issued a $450 144a Sukuk in 2010 and two international Sukuk with a total value of $1.6 billion in 2007. The company also raised 750 million Saudi Riyals ($200 million) through a locally issued Sukuk in May 2009.