Saudi dollar sukuk to comply with US risk rules: report

10/04/2017 Argaam

Saudi Arabia has included a disclosure on credit risk retention requirements, in the prospectus of a debut dollar sukuk, expected this week and could total $10 billion, Reuters reported.

 

Saudi Arabia said it does not consider its planned sukuk a securitization, but it "may be captured, as a technical matter, by the language of the US risk retention rules", according to the prospectus.

 

Sukuk are generally considered to be asset-based, rather than asset-backed, but in order to comply with the rules, it will purchase at least 5 percent of the aggregate principal amount of each tranche it issues, the Saudi prospectus shows.

 

Since last December, U.S. credit risk retention rules have become effective for all types of asset-backed securities generally defined as securities collateralized by any type of self-liquidating financial asset.

 

Saudi Arabia began meeting investors on Sunday ahead of the second debt sale by the kingdom.

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