Saudi Arabia's Dar Al Arkan Real Estate Development Company has announced the launch of a SR2.8 billion ($750 million) International Islamic Sukuk Programme, in multiple tranches over a twelve month period.

The order book for the first tranche was opened on May 20 and closed the next day afternoon, the company said in a statement posted on the website of the Saudi bourse.

Bahrain-based Bank Alkhair jointly led the sukuk programme, which is based on the Islamic Wakala structure along with Deustche Bank, Goldman Sachs and Emirates NBD Capital as bookrunners.

The first tranche received significant interest from international and regional market participants with oversubscription of more than 3.7 times of the amount issued, with overall order book crossing the SR6 billion, the statement added.

Commenting on the demand, Sheikh Yousef Al-Shelash, the chairman of Dar Al-Arkan said, "The success of this sukuk issue, given the continued adverse global economic climate, is a testament to investor confidence in the company’s solid business model and Saudi Arabia’s robust economy."

The successful closing of the first tranche concluded with an amount issued of SR1.69 billion ($450 million), at a profit rate of 5.75 per cent per annum, and maturing in 5 years on May 24, 2018.

The programme was established to fund Dar Al Arkan’s current and upcoming projects. Bank Alkhair also acted as the Shariah advisor of the programme.

Commenting on the successful closing, Ikbal Daredia, the head of Bank Alkhair’s global capital markets division, said: "We are pleased at the positive response we received from the international financial community. The oversubscription of the issue demonstrates increasing investor appetite for Sukuk and for quality issuers like Dar Al Arkan."

Standard & Poor's ratings service is expected to assign a rating of 'B+' to the issue. S&P’s recently affirmed Dar Al-Arkan’s B+ credit rating and revised its outlook to positive from stable due to the Company’s resilient operating performance.

The sukuk, which was issued through the Dar Al-Arkan Sukuk Company, marks the Saudi firm's fourth international sukuk issue.-TradeArabia News Service