Saudi Civil Aviation Hires HSBC, NCB, StanChart for Sukuk

Saudi Arabia’s General Authority of Civil Aviation, which raised 15 billion riyals ($4 billion) from Islamic bonds sale last year, hired three banks for another local-currency offering, a banker familiar with the matter said.

The Saudi Arabian affiliate of HSBC Holdings Plc (HSBA), National Commercial Bank’s investment banking unit and Standard Chartered Plc will manage the sukuk sale, according to the banker, who asked not to be identified because the information is private. NCB Capital and Standard Chartered bid jointly for the mandate.

A spokesman for the authority known as GACA, who asked not to be identified because of company policy, confirmed that banks have been hired for a sukuk sale. He declined to specify how much the authority sought to raise.

Reuters, which reported the story earlier today, said GACA may sell 15 billion riyals in an offering before the start of Ramadan, the Muslim month of fasting which is due to start next month. The GACA spokesman said the timing of the sale hasn’t yet been decided.

GACA said last year it plans to issue a second tranche of notes complying with Islam’s ban on paying interest to fund an airport expansion in the Saudi capital, Riyadh.

Issuers in Saudi Arabia, the world’s biggest oil exporter, sold a record amount of sukuk in 2012 as borrowing costs plunged. GACA sold Islamic debt last year at 2.5 percent and used proceeds to finance an airport expansion in the Red Sea port city of Jeddah.

To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net; Deema Almashabi in Riyadh at dalmashabi@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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