Bank Al Bilad, Aljazira said to plan local sukuk issues

Saudi Arabia-based banks Aljazira and Al Bilad are planning to sell Islamic bonds, or sukuk, to boost their capital reserves, Reuters reported, citing sources familiar with the matter.

Bank Al Jazira will meet local fixed income investors this week to help improve its Tier 2, or supplementary, capital levels, one source told the news agency.

The transaction is expected to run for 10 years, but will include an option for the lender to redeem the sukuk after five years, the report said.

The sale is being arranged by GIB Capital and the bank's own investment banking arm, the source added.

Bank Al Bilad, meanwhile, has chosen HSBC Saudi Arabia to arrange its own Tier 2-enhancing sukuk, two sources were quoted as saying.

Marketing for the transaction is likely to start before Ramadan (June 6 or 7).

Al Jazira and Bank Al Bilad are among Saudi lenders that have the lowest total capital adequacy ratios (CAR), which is a combination of Tier 1 and Tier 2 capital and a key indicator of financial health.