Saudi Telecom Company has tightened pricing on a $2 billion dual-tranche sukuk after drawing orders of more than $5.4 billion, underlining sustained global appetite for high-grade Gulf credit and reinforcing the firm’s standing as a frequent and disciplined issuer in international Islamic capital markets.
The transaction was issued under a Reg S and 144A format, widening access to both offshore and US-based institutional investors. According to deal terms circulated to investors, the sukuk was split evenly between five-year and 10-year tranches, each sized at $1 billion. Initial price guidance was revised tighter following bookbuilding momentum that exceeded expectations, allowing Saudi Telecom to lock in funding at levels seen as attractive amid a still-volatile global rate environment.
Market participants said the order book reflected a broad geographic mix, with strong participation from Middle Eastern institutions, Asian asset managers and US-based funds seeking exposure to investment-grade Gulf issuers. Islamic banks and dedicated sukuk funds were joined by conventional investors, highlighting the continued crossover appeal of Saudi corporate sukuk.
The five-year tranche was priced at a spread that narrowed from initial indications, while the longer 10-year notes also tightened meaningfully, signalling confidence in Saudi Telecom’s credit profile and cash-flow visibility. Bankers involved in the transaction described the demand as comfortably oversubscribed across both tenors, enabling the issuer to optimise pricing without sacrificing tenor diversification.
Saudi Telecom, majority owned by the Public Investment Fund, is one of the region’s most active corporate issuers and is widely regarded as a benchmark credit. The company benefits from dominant market share in the domestic telecoms sector, steady recurring revenues and a balance sheet that rating agencies have consistently assessed as resilient. Proceeds from the sukuk are expected to be used for general corporate purposes, including refinancing and ongoing investment in digital infrastructure.
The deal comes at a time when Gulf issuers are returning to capital markets with greater frequency, taking advantage of investor demand for relatively stable credits amid uncertainty in developed markets. Despite expectations of interest-rate easing later in the year, borrowers have continued to front-load issuance, aiming to secure funding before any shift in market sentiment.
Analysts noted that Saudi Telecom’s ability to tighten pricing aligns with a broader trend among top-tier issuers from the region, where order books have routinely exceeded deal sizes. Investment-grade names with government links have been particularly well received, as investors balance yield considerations against credit quality.
The sukuk structure complies with Shariah principles and adds to Saudi Telecom’s diversified funding profile, which includes conventional bonds and Islamic instruments across multiple currencies. This flexibility has allowed the company to manage maturities efficiently while maintaining access to a wide investor base.
For investors, the transaction offered exposure to a defensive sector with limited cyclicality, at a time when volatility in equity and high-yield credit markets has prompted a search for relative safety. Telecoms issuers are often viewed as beneficiaries of stable demand, even during economic slowdowns, given the essential nature of their services.
Regional debt capital market specialists said the success of the deal could encourage other large Gulf corporates to follow suit, particularly those considering longer-dated sukuk to extend duration. The tightening of spreads also provides a reference point for forthcoming issuances, potentially lowering funding costs across the sector.
The transaction was issued under a Reg S and 144A format, widening access to both offshore and US-based institutional investors. According to deal terms circulated to investors, the sukuk was split evenly between five-year and 10-year tranches, each sized at $1 billion. Initial price guidance was revised tighter following bookbuilding momentum that exceeded expectations, allowing Saudi Telecom to lock in funding at levels seen as attractive amid a still-volatile global rate environment.
Market participants said the order book reflected a broad geographic mix, with strong participation from Middle Eastern institutions, Asian asset managers and US-based funds seeking exposure to investment-grade Gulf issuers. Islamic banks and dedicated sukuk funds were joined by conventional investors, highlighting the continued crossover appeal of Saudi corporate sukuk.
The five-year tranche was priced at a spread that narrowed from initial indications, while the longer 10-year notes also tightened meaningfully, signalling confidence in Saudi Telecom’s credit profile and cash-flow visibility. Bankers involved in the transaction described the demand as comfortably oversubscribed across both tenors, enabling the issuer to optimise pricing without sacrificing tenor diversification.
Saudi Telecom, majority owned by the Public Investment Fund, is one of the region’s most active corporate issuers and is widely regarded as a benchmark credit. The company benefits from dominant market share in the domestic telecoms sector, steady recurring revenues and a balance sheet that rating agencies have consistently assessed as resilient. Proceeds from the sukuk are expected to be used for general corporate purposes, including refinancing and ongoing investment in digital infrastructure.
The deal comes at a time when Gulf issuers are returning to capital markets with greater frequency, taking advantage of investor demand for relatively stable credits amid uncertainty in developed markets. Despite expectations of interest-rate easing later in the year, borrowers have continued to front-load issuance, aiming to secure funding before any shift in market sentiment.
Analysts noted that Saudi Telecom’s ability to tighten pricing aligns with a broader trend among top-tier issuers from the region, where order books have routinely exceeded deal sizes. Investment-grade names with government links have been particularly well received, as investors balance yield considerations against credit quality.
The sukuk structure complies with Shariah principles and adds to Saudi Telecom’s diversified funding profile, which includes conventional bonds and Islamic instruments across multiple currencies. This flexibility has allowed the company to manage maturities efficiently while maintaining access to a wide investor base.
For investors, the transaction offered exposure to a defensive sector with limited cyclicality, at a time when volatility in equity and high-yield credit markets has prompted a search for relative safety. Telecoms issuers are often viewed as beneficiaries of stable demand, even during economic slowdowns, given the essential nature of their services.
Regional debt capital market specialists said the success of the deal could encourage other large Gulf corporates to follow suit, particularly those considering longer-dated sukuk to extend duration. The tightening of spreads also provides a reference point for forthcoming issuances, potentially lowering funding costs across the sector.
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