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Banque Saudi Fransi (BSFR), partly owned by Credit Agricole SA (ACA), is raising $750 million in Islamic bonds at the lowest rate among Persian Gulf banks this year, four people familiar with the matter said.
The Riyadh-based bank priced the five-year sukuk at 185 basis points, or 1.85 percentage points, over the benchmark midswap rate, the people said, declining to be identified because the information is private. That’s the lowest rate among at least eight financial institutions that raised dollar- denominated debt in the six-member Gulf Cooperation Council this year, data compiled by Bloomberg show.
Lower borrowing costs help Saudi banks raise long-term funds to meet a surging demand for loans in the biggest Arab economy. Bank lending in the kingdom, the world’s top oil exporter, advanced at an annual rate of 12.6 percent in March, the fastest pace in three years, central bank data show, as a $500 billion government spending plan encourages private businesses and consumers to borrow.
“The tight pricing in my view is based on the fact that there is a big thirst by emerging markets credit investors for hard-currency Saudi paper, given the lack of outstanding U.S. credits in Saudi and the country’s robust economic drivers and outlook,” said Gus Chehayeb, Dubai-based director of Middle East and North Africa credit research at Exotix Ltd.
Saudi Arabia’s economy may expand 6 percent this year, the second-highest pace in the GCC after Kuwait, according to International Monetary Fund data.
The sale received about $4 billion in bids, the people said. Citigroup Inc. (C), Credit Agricole SA, Deutsche Bank AG managed the sale, they said, with Credit Agricole also acting as a global coordinator.
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