Skip to content Skip to Search
Skip navigation

Demand is high for Alrajhi bank’s first green sukuk

Funds in green sukuk are placed in traceable, environmentally friendly investments such as renewable energy projects Anna Jiménez Calaf/Unsplash
Funds in green sukuk are placed in traceable, environmentally friendly investments such as renewable energy projects
  • Alrajhi completes $1bn sukuk
  • Saudi bank raises $3.5bn subscriptions
  • 51% allocated to Mena investors

Saudi Arabia’s Alrajhi Bank has completed its $1 billion sukuk – having raised $3.5 billion in subscriptions from local and international investors – as the kingdom’s lenders push to raise funds for the government’s expensive giga-projects. 

Sukuk are sharia-compliant bonds that were developed as an alternative to conventional bonds, which are not considered permissible by many Muslims as they pay interest and may finance businesses involved in activities not allowed under Islamic law.

Alrajhi, the world’s largest Islamic bank, said 51 percent was allocated to investors in the Middle East and North Africa, 8 percent in Asia, 31 percent to investors in the US and Europe and 9 percent to Saudi investors. 



The issuance is the first sustainable Additional Tier 1 (AT1), or additional capital sukuk, in the Gulf region, where funds are placed in traceable environmentally friendly investments. 

AT1 sukuks have no fixed maturity date but are callable by the issuer after five years. Saudi banks have been issuing such “perpetual” sukuks since 2015, but none have been classified as sustainable or green. 

Analysts say the Gulf lags behind Europe in sustainable issuance because the environmental, social and governance (ESG) sector remains underdeveloped, making it difficult to place and track sustainable funding. 

The sukuk has a size of $1 billion and a profit rate of 6 percent annually, Alrajhi said in a statement on 12 May. 

“This issuance will be used to enhance the bank’s liquidity and support the growth of its balance sheet, especially in terms of sustainable and social projects that are in line with the goals and vision of Saudi Arabia 2030,” it said. 

Alrajhi previously issued a $1 billion five-year sustainable sukuk in March, following a SAR 10 billion ($2.6 billion) Tier 1 SAR-denominated sukuk in November 2022. 

In February, the Saudi sovereign wealth fund – the Public Investment Fund (PIF) – raised $5.5 billion through its latest green bond issuance following $3.5 billion raised in October, and a second sukuk, with a seven-year term, is expected this year

With three years of budget deficits predicted, PIF is under pressure to provide funding for the $1.25 trillion giga-projects at the heart of Saudi Arabia’s vast economic transformation plan and is pushing local banks to maintain credit lines.

Latest articles

Russians Turkey Istanbul Bridge

Russians rush from Turkey as costs and restrictions bite

Rising costs, increased difficulties in obtaining residency permits and tighter enforcement of restrictions on the number of foreign nationals who can live in popular regions are prompting an exodus of Russian citizens from Turkey.  The number of Russian nationals holding Turkish residence permits has plunged to just over 96,000 as of May 16, down from […]

Saudi Comac Dongfeng He Bandar al-Khorayef

Chinese planemaker banned by US woos Saudi airlines

The boss of a leading Chinese planemaker arrived in Saudi Arabia this week to pitch his aircraft just as the United States said it was close to finalising a defence agreement with Riyadh that is meant to limit its trade links with China.  Dongfeng He, chairman of Comac, the Commercial Aircraft Corporation of China, wants […]

The UAE's minister of industry and advanced technology, Sultan Al Jaber, left, met Karl Nehammer, Chancellor of Austria, for talks on trade

Austrian finance unicorn to open in UAE

Austria’s first unicorn has announced plans to set up in Dubai, as officials from the UAE hold top-level talks in Vienna to build on a 22 percent increase in bilateral trade last year A unicorn is a startup company valued at more than $1 billion that is privately owned and not listed on a share […]