StanChart, JPMorgan, NCB Capital to Manage Saudi Telecom Sukuk

Saudi Telecom Co. hired Standard Chartered Plc, JPMorgan Chase & Co. and NCB Capital to market its debut Islamic bond as companies in the oil-rich kingdom increasingly tap the debt market for funds.

The banks will manage the potential sale under a 5-billion riyal ($1.3 billion) sukuk program, Saudi Telecom said in a statement today. The size of the private local placement will depend on market conditions, it said in the statement.

Saudi Arabian companies are diversifying their financing sources as the Arab world’s biggest economy spends billions of dollars to develop infrastructure. Banque Saudi Fransi, the lender part owned by Credit Agricole SA, is planning to raise about 2 billion riyals to bolster its capital base, while Saudi airliner Flynas is considering a sukuk sale to fund its expansion.

While riyal-denominated local private placements have been the preferred option for many companies, others have started to venture into sales abroad. Saudi Electricity Co., the state-owned utility, last month raised $2.5 billion from sale of two-part sukuk to international investors.

Saudi Telecom’s sukuk plan comes after Mohammad Al Kharashi, the governor of the state-run Public Pension Agency, earlier this month said he welcomed more sukuk offerings. The power utility, majority owned by the government, reported a 54 percent increase in first-quarter profit.

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