JEDDAH, 25 July 2006 — The Saudi stock market plunged yesterday after rising over 230 points on Sunday. The Tadawul All-Share Index (TASI) dropped 317.98 points or 2.89 percent to 10,690.72.
Out of 81 stocks traded, 71 stocks were in the negative territory while shares of only 10 companies edged higher yesterday.
Stock market turnover also fell sharply from over SR20 billion on Sunday to SR12.35 billion yesterday. All sector indexes declined yesterday.
The Banking Index closed at 31,039.06, down 515.17 points as shares of seven banks fell yesterday. Shares of The Saudi Investment Bank, Saudi Hollandi Bank and Samba Financial Group rose. All shares of the cement, electricity, telecom and insurance sectors were in the red yesterday.
In the industrial sector, shares of National Gypsum Co. and Food Products Co. increased while shares of all other companies declined yesterday.
Shares of the petrochemical giant Saudi Basic Industries Corp. (SABIC) fell 3.60 percent to SR134.
SABIC yesterday signed the underwriting agreement for its debut Sukuk issuance for a total amount of SR3 billion, the first public Sukuk issuance in the Saudi market under the new Capital Market Law. The underwriting agreement was signed with the lead manager, HSBC Saudi Arabia Ltd. (HSBC), and a group of co-managers that included Banque Saudi Fransi, National Commercial Bank, Samba Financial Group, Saudi Hollandi Bank, SABB and Gulf International Bank. HSBC is also acting as the Sukuk-holders’ Agent, while SABB Amanah of SABB is the Shariah coordinator and SABB is the payments administrator for this landmark transaction.
The offering, which was open only to Saudi Arabian investors, proved to be a tremendous success and attracted orders from a diverse base of investors. Based on the final allocation, 49 percent of the SR3 billion was allotted to pension, mutual & other funds, 15 percent to corporates and institutions, and 36 percent to banks in Saudi Arabia.
SABIC Vice Chairman and Chief Executive Officer Mohamed Al-Mady said, “With this debut issuance, SABIC is pleased to have led the way in opening up the non-equity capital market sector in the Kingdom. We are gratified that we were able to achieve our key objectives with this transaction, namely further development of the Kingdom’s capital markets and providing investors with greater investment choice, and the first step in diversification of our funding sources.”
Mutlaq H. Al-Morished, SABIC vice president, corporate finance, said, “The issuance in a Sukuk format also demonstrates SABIC’s continuing commitment to promote and lead Islamic financing. The participation of a diverse investor base within the Kingdom reflects the confidence in SABIC and its growth prospects. Such confidence was also evident in the substantial oversubscription in the offering, resulting in scaling down in allotments despite issuing at the maximum approved amount of SR3 billion.”
Timothy Gray, chief executive officer of HSBC Saudi Arabia said, “We are delighted to have assisted SABIC in this landmark issuance. This transaction further underscores HSBC’s leadership and drive in capital markets innovation. The transaction is also testimony to HSBC’s key strengths in structuring complex transactions and offering clients Islamic finance solutions. We are grateful to SABIC for having given HSBC this opportunity to structure and lead the transaction, and to the Capital Market Authority (CMA) and Tadawul for their support for this innovative and first-time issuance.”
The settlement date for the Sukuk has been fixed for July 29, 2006, and the Sukuk is expected to begin trading a few days thereafter.
