SAIBORSaudi Arabia Interbank Offered Rate
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On 9 October 2011, Saudi Aramco issued a Sukuk for SAR 2,344 at par value with semi-annual payments from 20 December 2014 to 20 December 2025 that provide a rate of return above SAIBOR. The Sukuk was structured as Istisnah for pre-construction and Ijara for post-construction of the project.
I would estimate 95 per cent of total Sukuk issues in Saudi Arabia are linked to Saibor.
The three-month interbank rate (SAIBOR) was more or less unchanged through 2013, at one per cent.
The Islamic bond has a lifespan of seven years, with a clause allowing the bank to redeem the paper after five years, and was priced at 1.4% over the six-month Saudi interbank offered rate (Saibor), the bourse filing said.
One-year SAIBOR is now 4 basis points above the one-year dollar London Interbank Offered Rate, after being 9 bps below it at the start of 2012.
Two tranches of the facility carried a profit rate of 0.7 percent over the Saudi Interbank Offered Rate (SAIBOR), with the remaining two pieces priced at 0.65 percent over SAIBOR.
Mobily negotiated the refinancing at Murabaha rate of SAIBOR (Saudi Interbank Offered Rate) + 0.70%, until the end of the loan repayment period of two of the tranches and SAIBOR + 0.65% until the end of the loan repayment period of the other two tranches.
Pricing for the combined conventional and Islamic debt ranges from 165 to 275 basis points over Saudi Interbank Offered Rate (Saibor) depending on riyal and dollar funding and the stage of projects, the bankers said.
(SEC) was 160 basis points over the Saudi interbank rate (Saibor),the firm's top executive, Eng.
Early this year, mortgage holders who lack financial knowledge found themselves exposed to the Saudi interest rate rise (SAIBOR).
Darweesh continued: "This remains an important objective in a rising interest rate environment and we have been successful in reducing our cost of financing by settling more expensive debt obligations and securing more competitive facilities, despite an increase in average SAIBOR rates from 1.8 per cent to 2.3 per cent, this increase has been partially offset by reducing our bank margins and by profit rate hedging deals.
Saudi Arabia's improving liquidity and funding conditions since 2017 have narrowed the Saudi Arabian Interbank Offered Rate's (SAIBOR) spread against US dollar-denominated London Interbank Offered Rate, even reaching negative spreads in March 2018, despite several rate hikes by the US Federal Reserve.