Savola Group, Saudi Arabia"s largest food products company, confirmed on Tuesday it had raised 1 billion riyals ($267 million) in sukuk, or Islamic bonds, in a deal arranged by the Saudi arm of HSBC. Savola made the deal public in a bourse filing, confirming what sources familiar with the matter had earlier told Reuters. Savola and other consumer goods companies in Saudi Arabia are suffering from the effects of subsidy cuts, the introduction of VAT sales tax and an exodus of expatriates, which have all put pressure on consumer spending. The company had said in May it planned to issue the bonds to back its financial and strategic needs. Savola"s bonds, issued last week, offer investors a profit rate equivalent to 160 basis points over the 6-month Saudi interbank offered rate. One of the sources said the deal was priced at the level at which it was initially marketed, which is unusual in bond markets, where new issues tend to price below initial price guidance, reflecting demand. A spokesman for Savola referred to the company"s filing, which said subscription requests for the new bonds exceeded the issuance value by more than 1.6 times. HSBC declined to comment. Around half the value of the privately placed sukuk, with a seven-year maturity, was exchanged with previous Islamic bonds issued by the company, Savola said. Savola"s issue comes after Saudi Arabia this year reduced fees for new debt offerings and annual registration charges for issuers, as part of efforts to spur local market activity. ($1 = 3.7503 riyals)