Al Rajhi Bank (1120) has secured the “largest loan in the Middle East” this year, securing over USD 1.9 billion, according to Bloomberg.
Details
The “Islamic syndicated loan”, which attracted 20 lenders, is sustainability-linked and will mature in three years.
The financing will be divided into a tranche of USD 1.2 billion and another of USD 705 million.
It will be used to fund the bank’s general purposes.
So what
Al Rajhi’s share value jumped about 1.66% to a reach of SAR 85.6 during trading on Tuesday after the news was announced.
This is a one-of-a-kind deal given the scarcity of Shariah-compliant, sustainability-linked dollar-denominated loans
The credit line follows Al Rajhi’s issuance of sukuk (Islamic bonds) worth USD 1 billion in May.
Some context
Middle Eastern banks raised about USD 50 billion in loans during the first nine months of 2024.
This is a threefold increase from the USD 16 billion raised during the same period last year, according to data by Bloomberg.
Now what
The latest loan to the giant Saudi bank comes amid ongoing liquidity shortages in the kingdom.
Loan growth has exceeded deposit growth to safeguard the local economy, which contracted last year.
Bloomberg Intelligence projects that local banks will issue new debt instruments with a value of between USD 10-15 billion annually until 2028 to support the country’s investment strategy.
