Global banking giant HSBC said its Saudi unit has successfully closed the first private placement of SR1.5 billion ($400 million) sukuk (Islamic bond) issue for its affiliate The Saudi British Bank (SABB).

The 5-year bond is the first subordinated Tier II sukuk transaction which comes in line with the Basel III transitional arrangement requirements in the region, said a HSBC statement.

As part of the issue, SABB has offered investors in its senior 2008 SR1.7 billion notes the options to buy all or parts of their notes if they wished to participate in the new Sukuk issue, the bank stated.

The investors have the option of subscribing to the Sukuk issue with 'new money,' the statement added.

Commenting on the sukuk issue, Fahad Alsaif, the head of debt capital market, Saudi Arabia, said: "This transaction is a continuation of HSBC Saudi's focus in developing financing solutions for its clients and bring innovative structures to the market that meet the needs of both the issuers and the investors."

"This transaction has introduced many new elements to the market, including exchanging from senior to subordinated notes, which reflects HSBC's unique capabilities in advisory, arrangement, brokerage and assets management in Saudi and GCC markets," he added.

HSBC said the sukuk will support SABB's growth plans and extends the maturity profile of its liabilities while continuing to diversify its sources of funding.-TradeArabia News Service