Saudi Arabia's ACWA plans $800m sukuk by year-end

Updated 02 November 2013
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Saudi Arabia's ACWA plans $800m sukuk by year-end

JEDDAH: Saudi water and power project developer ACWA Power plans to sell an $800 million debut Islamic bond this year and list on the Saudi stock exchange around the end of 2014 as it ramps up production capacity, its chief executive said.
ACWA, which aims to have a gross production capacity of 38,000 MW of power by 2017 from its current 15,850 MWs, has said previously that securing a credit rating would be a step on the road to launching an Islamic bond, or sukuk.
However, chief executive Paddy Padmanathan indicated the firm might come to market without a rating.
"That was one of the things that kept us back for a while, and there was a decision (internally) around 'do we need to be rated' as ratings are a one-way street - once you rate, you are stuck with the story forever," he told reporters on the sidelines of a renewables event in Dubai.
International debt sales from Saudi entities are rare, meaning there is much investor interest in paper from the kingdom - bluechip Saudi Basic Industries Corp 2010.SE printed its first deal in three years last week and received bids worth more than five times the $1 billion bond size.
Most borrowers seek a rating because investors often have restrictions which limit them to investing in paper of a certain grade, although some Gulf borrowers have completed deals without one, including the government of Dubai and Emirates airline.
Padmanathan said ACWA had just finished a study with consulting firm KPMG about its readiness for an initial public offering (IPO) and that it was targeting a listing for the end of 2014.
He wouldn't be drawn on how much it might raise from the IPO, although he said the company's current valuation was "a few billion dollars."
No banks had been mandated to arrange either the sukuk or the public share sale, Padmanathan said.
ACWA is also negotiating a 5 percent capital increase with the International Finance Corporation (IFC), a unit of the World Bank, Padmanathan said.
He declined to comment on how much the IFC might pay for the holding.
In January, two Saudi government-owned funds bought a 19.4 percent stake in ACWA.
No price was disclosed.
ACWA was currently bidding for renewables projects worth $3 billion in the Middle East and North Africa region, including what would be Saudi Arabia's first utility-scale solar power plant - a 100 MW plant in Makkah, Padmanathan said.
The Saudi firm was bidding against a consortium led by Electricite de France, with a decision expected on the $250 million scheme by the end of the year.
A power purchase agreement for the 1,800 MW Rabigh 2 power plant, commissioned by Saudi Electricity Co (SEC), would likely be signed by the end of the month, with financial close on the $1.2 billion project financing soon after, he said.
The project was thrown into confusion earlier this year after SEC changed the fuel for the plant to gas from oil - with speculation that the ACWA-led consortium, which included Samsung C&T and MENA Fund, would have to reapply to build the scheme as a result.
Rabigh 2 is now due to cost $1.6 billion, Padmanathan said.
That would be a significant reduction from the $2.5 billion expected total when it was a fuel oil project.


US unveils new veto threat against WTO rulings

Updated 23 June 2018
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US unveils new veto threat against WTO rulings

  • US tells WTO appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days
  • Trump, who has railed against the WTO judges in the past, threatens to levy a 20 percent import tax on European Union cars

GENEVA: The United States ramped up its challenge to the global trading system on Friday, telling the World Trade Organization that appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days.
The statement by US Ambassador Dennis Shea threatened to erode a key element of trade enforcement at the 23-year-old WTO: binding dispute settlement, which is widely seen as a major bulwark against protectionism.
It came as US President Donald Trump, who has railed against the WTO judges in the past, threatened to levy a 20 percent import tax on European Union cars, the latest in an unprecedented campaign of threats and tariffs to punish US trading partners.
Shea told the WTO’s dispute settlement body that rulings by the WTO’s Appellate Body, effectively the supreme court of world trade, were invalid if they took too long. Rulings would no longer be governed by “reverse consensus,” whereby they are blocked only if all WTO members oppose them.
“The consequence of the Appellate Body choosing to breach (WTO dispute) rules and issue a report after the 90-day deadline would be that this report no longer qualifies as an Appellate Body report for purposes of the exceptional negative consensus adoption procedure,” Shea said, according to a copy of his remarks provided to Reuters.
An official who attended the meeting said other WTO members agreed that the Appellate Body should stick to the rules, but none supported Shea’s view that late rulings could be vetoed, and many expressed concern about his remarks.
Rulings are routinely late because, the WTO says, disputes are abundant and complex. Things have slowed further because Trump is blocking new judicial appointments, increasing the remaining judges’ already bulging workload.
At Friday’s meeting the United States maintained its opposition to the appointment of judges, effectively signalling a veto of one judge hoping for reappointment to the seven-seat bench in September.
Without him, the Appellate Body will only have three judges, the minimum required for every dispute, putting the system at severe risk of breakdown if any of the three judges cannot work on a case for legal or other reasons.
“Left unaddressed, these challenges can cripple, paralyze, or even extinguish the system,” chief judge Ujal Singh Bhatia said.
Sixty-six WTO member states are backing a petition that asks the United States to allow appointments to go ahead. On Friday, US ally Japan endorsed the petition for the first time, meaning that all the major users of the dispute system were united in opposition to Trump.