RIYADH: Saudi Arabia’s banking sector is experiencing a surge in activity in debt and sukuk markets as leading financial institutions move to strengthen their capital bases and fund strategic growth initiatives. 

Al Rajhi Bank, Banque Saudi Fransi, and Arab National Bank are among the key players announcing substantial issuances to tap local and international investors.

This wave in activity supports the Capital Market Authority’s objective of transforming the Kingdom’s investment market into a key pillar of the its economy, as outlined in Vision 2030. The plan emphasizes expanding financing options, promoting funding opportunities, and attracting international investors.

Al Rajhi Bank unveiled plans to issue US dollar-denominated additional Tier 1 capital sustainable sukuk under its international sukuk program established in April. 

The issuance, approved by the bank’s board in March, will be executed through a special purpose vehicle and offered to eligible investors both within Saudi Arabia and abroad, according to a statement on the Saudi stock exchange.

The bank has enlisted a consortium of leading financial institutions, including Citigroup, HSBC, and Goldman Sachs, as joint lead managers and bookrunners for the proposed issuance. 

Banque Saudi Fransi similarly announced its intention to issue US dollar-denominated certificates under its Trust Certificate Issuance Program. The initiative follows a board resolution granting executive management the authority to oversee the program and carry out issuances as needed. 

“The issuance is expected to be through a special purpose vehicle and by way of an offer to eligible investors in the Kingdom of Saudi Arabia and internationally,” a statement said.

HSBC will serve as global coordinator, and several prominent institutions, including Japanese-based bank holding company Mizuho and Saudi Fransi Capital, acting as joint lead managers. 

Meanwhile, Arab National Bank has opted for a Saudi Riyal-denominated additional Tier 1 capital sukuk. 

The private placement, valued at SR11.25 billion ($2.9 billion), aims to bolster the bank’s capital base while supporting general corporate purposes. HSBC Saudi Arabia and ANB Capital Co. have been appointed as joint lead managers for the issuance. 

The developments highlight the growing momentum in the Kingdom’s financial markets as banks look to diversify funding sources and enhance their capital adequacy. 

By prioritizing sustainable finance and investor protection, Saudi Arabia is aligning with international standards and leveraging its leadership in Islamic finance to attract a broader range of investors.

The CMA’s strategy seeks to expand the debt instruments market to 24.1 percent of gross domestic product by 2025 by implementing regulatory reforms, improving market accessibility, and streamlining issuance processes.

SINGAPORE: Oil prices extended gains for a third session on Monday, with Brent rising above $80 a barrel to its highest in more than four months, as wider US sanctions are expected to affect Russian crude exports to top buyers China and India.

Brent crude futures climbed $1.14, or 1.43 percent, to $80.90 a barrel by 10:41 a.m. Saudi time after hitting an intraday high of $81.49, the highest since Aug. 27.

US West Texas Intermediate crude rose $1.20, or 1.57 percent to $77.77 a barrel after touching a high of $78.39, the most since Oct. 8.

Brent and WTI have risen by more than 6 percent since Jan. 8, and both contracts surged after the US Treasury imposed wider sanctions on Russian oil on Friday.

The new sanctions included producers Gazprom Neft and Surgutneftegas, as well as 183 vessels that have shipped Russian oil, targeting the revenue Moscow has used to fund its war with Ukraine.

Russian oil exports will be hurt severely by the new sanctions, pushing China and India, the world’s top and third-largest oil importers respectively, to source more crude from the Middle East, Africa and the Americas, which will boost prices and shipping costs, traders and analysts said.

“Friday’s announcement strengthens our view that the risks to our $70-85 Brent range forecast are skewed to the upside in the short term,” Goldman Sachs analysts said in a note.

“We estimate that the vessels targeted by the new sanctions transported 1.7mb/d of oil in 2024 or 25 percent of Russia’s exports, with the vast majority being crude oil.”

Expectations of tighter supplies have also pushed Brent and WTI monthly spreads to their widest backwardation since the third quarter of 2024. Prompt prices are higher than those in future months in backwardation, indicating tight supply.

RBC Capital Markets analysts said the doubling of tankers sanctioned for moving Russian barrels could serve as a major logistical headwind to crude flows.

Many of the tankers named in the latest sanctions have been used to ship oil to India and China as previous Western sanctions and a price cap imposed by the Group of Seven countries in 2022 shifted trade in Russian oil from Europe to Asia. Some of the ships have also moved oil from Iran, which is also under sanctions.

“The last round of OFAC (US Office of Foreign Assets Control) sanctions targeting Russian oil companies and a very large number of tankers will be consequential in particular for India,” said Harry Tchilinguirian, head of research at Onyx Capital Group.

JPMorgan analysts said Russia had some room to maneuver despite the new sanctions, but it would ultimately need to acquire non-sanctioned tankers or offer crude at or below $60 a barrel to use Western insurance as per the West’s price cap.