RIYADH, 19 July 2007 — The Saudi Electricity Company (SEC) signed yesterday subscription agreements for a SR5 billion sukuk or bond, the largest ever to be issued by a Saudi entity, a statement from SEC said yesterday.
HSBC Saudi Arabia has been named as the lead manager and sole book runner.
“SEC is pleased to complete this landmark sukuk issue of SR5 billion - the largest ever by a Saudi company. This successful sukuk issuance follows the recent (A+) rating assigned to SEC by Fitch and Standard & Poor’s,” said SEC Acting Chief Executive Officer Yousif Balghanaim.
SEC had earlier given a 10-day subscription period to investors during which the order book built up quickly to SR7 billion - nearly three times SEC’s issuance target of SR2.5 billion. The overwhelming demand allowed SEC to issue sukuk worth SR5 billion - the maximum permitted by Saudi regulatory authorities. The sukuk priced over 45 basis points over the benchmark, a figure that represents substantial savings from the cost of SEC’s existing loans. Investors comprise a diversified mix pension, mutual funds, insurance and Takaful companies, corporate companies and banks (both Saudi and foreign).
The company’s recent ratings and the new financing flexibility established through tapping the diversified capital market establishes SEC as a fundamentally strong credit-worthy institution.
“The company is determined to use this financial flexibility to support its endeavors in meeting the Kingdom’s power needs through the provision of reliable and efficient services,” said Balghanaim.
He said the company was proud to contribute to the development of the Islamic finance industry and capital markets through the issuance of sukuk in the Kingdom.