Saudi Arabia said to mull changes to complex dollar sukuk

Saudi Arabia is considering whether to change the structure of its planned $10 billion dollar sukuk issue, Reuters reported, citing unnamed sources.

The kingdom has been planning a hybrid structure for the sukuk comprising a mudaraba agreement, a form of Islamic investment management partnership, plus a murabaha facility that would trade commodities with a special purpose vehicle.

However, there have been discussions to make the instrument more easily tradable and less complex to understand for international investors, the sources said.

The structure may be changed to an ijara format, a more common lease-financing structure. However, this might require the transfer of some assets pledged for the sukuk into a special purpose vehicle which could lead to legal and regulatory hurdles, the report said.