Saudi Arabia’s National Shipping Company has signed a US$219mn murabaha financing agreement with Saudi British Bank (SABB) and National Commercial Bank.

80% of the SR822.6mn funding will finance the construction of two general cargo ships, while the company will finance the remaining 20%.

The deal has a 12-year tenor and will be repaid in equal quarterly installments with a balloon payment − of approximately 30% of the contract value − at the end of the tenor.

The repayment will start three months after the ships have been delivered and will be mortgaged to the financing banks as a security.

The new ships will replace the company’s four current ships and will serve as a liner between the United States east coast to the Middle East (Red Sea-Arabian Gulf), and to the Indian subcontinent via Europe.

In March this year, the company signed a SR1.54bn shipbuilding contract with South Korea’s Hyundai Mipo Dockyard for the construction of four general cargo vessels.