The debt troubles of the Saad and Al Gosaibi groups have alerted international banks to what has been seen as a relatively low level of corporate governance in Saudi Arabia.
But the issuance of a $450 million, five-year 144a sukuk by developer Dar Al Arkan would not have been possible if the firm did not comply with US-approved standards of accountancy and management. It was the first Saudi corporation to formally roadshow a bond in the US. The roadshow also went to Europe and Asia.
The sukuk has an annual profit margin of 10.75% payable twice a year. Bahrain-based investment bank Unicorn, Deutsche Bank, and Goldman Sachs managed the issue, which was in a dual ijarah and murabaha Islamic structure.
But for the Greek crisis, the issuer would probably have been able to increase the size of the sukuk, says a banker close to the deal. But most deals in the second week of February, when the sukuk was issued, were pulled from the market altogether. This included a proposed issue by Bahrain’s United Gulf Bank.
First of the year
This was the first Gulf debt issuance to be closed in 2010.
