Best Islamic local-currency deal of the year:
Almarai SR1.7 billion perpetual corporate hybrid sukuk
Lead managers: HSBC, Standard Chartered, BNP Paribas, Saudi Fransi/Crédit Agricole
This was a year for innovation and scale out of Saudi Arabia, but the Almarai deal was more than just big. The SR1.7 billion perpetual sukuk, callable in year five, was a hybrid, the first of its kind from Saudi Arabia, and indeed from the MENA region in any currency. It was also the first corporate sukuk to be structured as equity eligible, and receives equity treatment under IFRS/Socpa standards.
It came about because Almarai needed to raise Shariah-compliant funds without increasing its leverage ratio. It also wanted to diversify its investor base away from local banks. Doing it, through a combination of a mudaraba and a murabaha structure, required completing a deal despite there being no benchmark to price against.
The deal was successful, pricing roughly in line with any other five-year deal, tightening considerably during marketing, and selling to a wider range of investors than the issuer had previously reached, with government-related entities and asset managers comprising 51% of the book.