Saudi Arabia's Dar Al-Arkan Real Estate will likely issue a five-year fixed rate Islamic bond worth between $500-750 million by the end of the week, two bankers with knowledge of the deal said on Monday.   

The Islamic bond, or sukuk, could be priced to yield between 10.5-11 percent, they said.   

The bond for the kingdom's largest developer by market value could be the first international issue from the Gulf region since conglomerate Dubai World rocked global markets on Nov 25 with plans to request a delay on repaying $26 billion in debt.   

'They have been struggling,' one banker said referring to the interest in the sukuk. 'They still haven't closed anything and they have been on the road for a long time now. 10.5 percent is not something that would make me excited. Mid-teens would have been good.'    

The roadshow has been held in the Middle East, Europe, Asia and the United States.

The new bond will likely be used to refinance a $600 million sukuk due in mid-February. The bonds proceeds will help finance 2.7 billion riyals of capital expenditure during 2010, a prospectus for investors showed.

Deutsche Bank, Goldman Sachs and Unicorn Investment Bank are arranging the sale.

The issue has been given a provisional rating of Ba2 and BB- by Moody's and Standard & Poor's respectively. Executives at Dar were not immediately available for comment. - Reuters