Dar Al-Arkan Successfully Closes First Tranche of US$750 Million Sukuk Programme

22 May 2013

Bank Alkhair is pleased to announce the successful close of the first tranche of a US$750 million Sukuk Programme established by Dar Al Al-Arkan Real estate Development Company (Dar Al-Arkan), a leading residential real estate developer in the Kingdom of Saudi Arabia.

Bank Alkhair jointly led the Sukuk Programme, which is based on the Islamic Wakala structure. The Programme was established to fund Dar Al Arkan's current and upcoming development projects. Bank Alkhair also acted as the Shari'ah Advisor of the Programme.

The first issue, a benchmark sized, 5-year, Regulation S issue (Reg S), was offered to the market on Monday, the 20th  of May, 2013. The Sukuk, which offers investors a coupon of 5.75%, received an overwhelming response from regional and international investors and was significantly oversubscribed. Dar Al-Arkan opted to close the first issue at US$450 million on Tuesday, the 21st of May, 2013, despite it being almost 4 times oversubscribed, with overall book order reaching up to US$1.68 billion.

Bank Alkhair, Deustche Bank, Goldman Sachs and Emirates NBD Capital were the joint bookrunners of the transaction.

Commenting on the successful close of the first tranche, Ikbal Daredia, Head of Bank Alkhair's Global Capital Markets division, said: "We are pleased at the positive response we received from the international financial community. The oversubscription of the issue demonstrates increasing investor appetite for Sukuk and for quality issuers like Dar Al Arkan. "

Sh. Yousef Al-Shelash, Chairman of Dar Al-Arkan, commented: "The success of this Sukuk issue given the continued adverse global economic climate is a testament to investor confidence in Dar Al-Arkan's solid business model and Saudi Arabia's robust economy."

Standard & Poor's Ratings Service is expected to assign a rating of 'B+' to the issue. Standard & Poor's recently affirmed Dar Al-Arkan's B+ credit rating and revised its outlook to positive from stable due to the Company's resilient operating performance.

The Sukuk, which was issued through the Dar Al-Arkan Sukuk Company Ltd., marks Dar Al-Arkan's fourth international Sukuk issue to date. The Company previously issued a US$450 million 144a Sukuk in 2010 and two international Sukuk with a total value of US$1.6 billion in 2007. The company also raised 750 million Saudi Riyals (US$200 million) through a locally issued Sukuk in May 2009.