Jan. 15 (Bloomberg) -- Saudi Arabia’s General Authority of Civil Aviation raised 15 billion riyals ($4 billion) from the sale of Islamic bonds, said a banker familiar with the transaction.
The 10-year notes will pay a profit rate of 2.5 percent, said the banker, who declined to be identified because the details are private. The authority plans to use funds from the sale to build a 27 billion-riyal ($7.2 billion) airport in Jeddah. HSBC Holdings Plc’s unit in Saudi Arabia managed the transaction.
The world’s largest oil exporter, which expects to post a 12 billion-riyal budget surplus this year, is undertaking a $384 billion plan to develop housing, education and transportation. Companies controlled by the government have turned to Islamic debt, which pays asset returns to comply with the religion’s ban on interest, to help finance projects.
Saudi Aramco Total Refining & Petrochemical Co., a joint venture between state-run Saudi Aramco and France’s Total SA known as Satorp, issued 3.75 billion riyals of Islamic bonds in 2011, the nation’s biggest sukuk sale that year, data compiled by Bloomberg show. The issue helped boost borrowings in the six-nation Gulf Cooperation Council last year by 62 percent to $7.35 billion, according to data compiled by Bloomberg.
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