DUBAI: Savola Group, Saudi Arabia's largest food products company, has raised 1 billion riyals ($267 million) in sukuk, or Islamic bonds, in a deal in which the Saudi arm of HSBC was lead arranger, sources familiar with the matter said.
The paper, issued last week, offers investors a profit rate equivalent to 160 basis points over the 6-month Saudi interbank offered rate, said the sources.
One of them added the deal was priced at the level at which it was initially marketed, which is unusual in bond markets, where new issues tend to price below initial price guidance, reflecting demand.
A spokesman at Savola Group did not immediately respond to a request for comment, while HSBC declined to comment.
Savola and other consumer goods companies in Saudi Arabia are suffering from the effects of subsidy cuts, the introduction of VAT sales tax and an exodus of expatriates, which have all put pressure on consumer spending.
The company had said in May it planned to issue the bonds to back its financial and strategic needs.
Savola's issue comes after Saudi Arabia this year reduced fees for new debt offerings and annual registration charges for issuers, as part of efforts to spur activity in the local debt market.