Arabian Centres Company, the largest mall operator in Saudi Arabia, plans to issue a US dollar-denominated Islamic bond, marking the kingdom's first corporate international bond issuance in 2021.
Proceeds from the sukuk will be used for "general corporate purposes" and to meet the company's financial and strategic objectives, Arabian Centres said in a statement to the Tadawul stock exchange on Wednesday.
"The number and value of any sukuk to be offered will be determined based on market conditions and the company’s financial condition, funding requirement and strategy," Arabian Centres said in the bourse filing. "The sukuk offering will be subject to the approval of the relevant regulatory authorities."
In 2019, Arabian Centres issued its debut $500 million five-year international sukuk after raising 2.47 billion Saudi riyals ($658.8m) through its initial public offering in the same year. The IPO was the country's biggest since local lender National Commercial Bank raised $6bn in 2014.
Moody's Investors Service on Wednesday assigned a Ba2 rating to Arabian Centres' planned sukuk issuance, it said in a note.
The planned sukuk will be "benchmark size" ($500m or more), with proceeds being used to repay $200m drawn under a revolving credit facility and the rest to finance future capital spending, the agency said.
Moody's also upgraded to Ba2 from Ba3 rating on the $500m sukuk due in 2024.
Arabian Centres Company's corporate family rating (CFR) remains unchanged at Ba2. All ratings are on negative outlook.
"Post transaction, ACC's unsecured debt will increase to above 50 per cent of total debt (excluding leases and unamortised transaction costs) from 26 per cent as of December 2020 and as a result, the CFR will reference an unsecured rating," Moody's said.
Still, the company has "good liquidity" despite lost rental income because of discounts agreed with tenants during lockdown periods when its malls were closed, Moody's said.
Arabian Centres, which was was established in 2002, is owned by Saudi Arabian retailer Fawaz Alhokair Group.
The company operates 21 shopping malls in 11 cities, which have more than 4,300 retail stores, according to its website.
Arabian Centres' nine month net profit to December 31 fell 34.1 per cent year-on-year to 359.7m riyals as revenue dropped 16.5 per cent due to the impact of Covid-19 containment measures on its malls.
Heather, the Totality
Matthew Weiner,
Canongate
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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