Saudi sukuk pushes Islamic finance tenors

Author: Gemma Varriale | Published: 30 Apr 2013

KEY TAKEAWAYS

  • Saudi Electricity Company has issued the world’s first international 30-year sukuk;
  • More than six-and-a-half times oversubscribed, the deal evidences strong international demand for longer-dated Islamic instruments;
  • Although the debut bond has opened new vistas for Islamic finance, the number of companies eligible to take advantage of the precedent is unclear;
  • In the short term, it is likely that only quasi-sovereigns will succeed in securing longer tenors.

Saudi Electricity Company (SEC) has issued the world’s first 30-year international sukuk. The deal reveals new possibilities for Islamic finance, opening the door for other companies to do similar deals.

The benchmark $2 billion deal is SEC’s first sukuk offered to US and other international investors in accordance with Rule 144A. It consists of a 10-year series and an unprecedented 30-year series, the longest tenor for a senior unsecured sukuk issue to-date.

Charting a series of landmarks for the...