Al Rajhi Bank, world's largest Islamic bank by assets and market capitalisation, expects to raise $1.25 billion from the sale of an Additional Tier 1 (AT1) sustainable sukuk, or Islamic bonds, a document from one of the banks arranging the deal showed on Thursday.

The bank has tightened the price guidance for the notes to 6.375%-6.500% from its initial guidance of around 6.875%, the document showed. The notes are perpetual in nature and can first be redeemed in May 2029.

The deal received more than $3.3 billion in orders and is expected to close later on Thursday, the document showed.

AT1 bonds, the riskiest debt instruments banks can issue, are designed to be perpetual in nature, but lenders can call them after a specified period.

(Reporting by Shamsuddin Mohd; editing by Jason Neely)