Saudi Telecom Company (STC) has successfully priced a dual-tranche sukuk totaling $2 billion, following robust investor interest and strong demand in the global market. The sukuk, issued under the RegS/144A format, attracted combined order books exceeding $5.4 billion, highlighting the market’s positive reception and confidence in STC’s creditworthiness. Saudi Telecom Tightens Pricing on $2 Billion Sukuk
Key Pricing and Investor Appetite
The first tranche of $1.25 billion consists of a 10-year senior unsecured sukuk, priced at par with a fixed coupon of 5.083%. This represents a spread of T+90 basis points over U.S. Treasuries, reflecting strong demand. Initial price thoughts (IPTs) for this tranche were set at T+125bps, but due to overwhelming demand, the spread was tightened to T+95bps, and the final pricing was set at T+90bps. The tranche saw a highly oversubscribed order book, peaking at $4.2 billion (excluding joint lead managers). Saudi Telecom Tightens Pricing on $2 Billion Sukuk
The second tranche, worth $750 million, is a 5-year sukuk with a coupon of 4.489%, also priced at par with a spread of T+75bps. Initially, IPTs for this tranche were set at T+115bps, but as with the first tranche, strong demand led to a tightening of spreads to T+85bps, with the final pricing coming in at T+75bps. The 5-year tranche attracted an impressive order book, peaking at $3.4 billion (excluding joint lead managers).
Key Participants and Listing
The $2 billion sukuk issuance was arranged by a consortium of prestigious financial institutions, with BNP Paribas, Citibank, Dubai Islamic Bank (DIB), Emirates NBD Capital, HSBC, and other notable joint lead managers and bookrunners contributing to the successful deal.
Both sukuk tranches will be listed on the London Stock Exchange’s International Securities Market (ISM), providing investors with transparency and liquidity.
Conclusion: A Strong Vote of Confidence in Saudi Telecom
The successful pricing of Saudi Telecom’s $2 billion sukuk illustrates the strong investor appetite for high-quality Islamic debt in the market, particularly when backed by a solid and well-established entity like STC. The sukuk issuance will provide STC with essential funding, reinforcing its continued expansion and growth. With favorable pricing and strong demand, the deal is a significant achievement for both STC and the Islamic finance market.
