Wednesday, Apr 03, 2013

(This story was originally published Tuesday.)

By Summer Said

Sadara, the $20 billion petrochemical joint venture between state oil giant Saudi Aramco and Dow Chemical Co. (DOW), said Tuesday it has increased the size of its Islamic bond, or sukuk, to 7.5 billion Saudi riyals ($2 billion) from the initial offering size of SAR5.25 billion due to strong demand.

"The Sukuk has received strong investor demand, resulting in 2.6 times oversubscription based on the initial offering size," Sadara said in an emailed statement.

Sadara said last month it has secured regulatory approval for the sukuk, which has a maturity of about 16 years, to partially finance its mega complex in Jubail on the Gulf coast.

Alinma Investment, AlBilad Investment, Deutsche Securities Saudi Arabia and Riyad Capital were mandated for conducting the sale, which was limited to Saudi nationals and investors with a permanent establishment in the kingdom.

The Sukuk investors will receive an expected return of six-month Saudi Interbank Offered Rate plus 95 basis points a year, to be distributed semi-annually.

Sadara complex, one of the world's largest chemicals plants, is expected to produce more than 3 million tons of petrochemicals each year when completed in 2016.

Khalid al-Falih, chief executive of Saudi Aramco, said in 2011 that Sadara would require large amounts of debt finance, with various options being looked into. This would include accessing export credit agencies, the kingdom's Public Investment Fund, which is part of the finance ministry, as well as the commercial market and sukuk, he added. Saudi Arabia is pouring billions of dollars into developing its petrochemical industry in a bid to add value to its vast hydrocarbon resources and to create jobs for its young and growing population.

The Sadara project represents Aramco's second major investment in a large-scale petrochemical complex in the kingdom, where it is already involved in a joint venture with Sumitomo Chemical Co. (4005.TO) at Rabigh on the Red Sea.

Write to Summer Said at summer.said@dowjones.com

(END) Dow Jones Newswires

03-04-13 0338GMT