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* Five-year unsecured loan
* One of the largest loans extended by a Chinese bank in Gulf
* ICBC opened branch in Saudi Arabia last year
(Adds detail, context)
By Tom Arnold and Maha El Dahan
DUBAI, June 30 (Reuters) - State-controlled utility Saudi Electricity Co (SEC) has obtained $1.5 billion in financing from Industrial and Commercial Bank of China (ICBC), one of the largest loans ever extended by a Chinese bank in the Gulf.
The loan from ICBC, the world's biggest bank by assets, underlines growing business ties between China and the region. In January, China and the six Gulf Cooperation Council nations said they aimed to conclude a free trade agreement this year.
The five-year "direct commercial funding agreement" was signed on June 29 and will be used to finance some of SEC's capital projects, the company said on Thursday without giving financial terms.
The loan was unsecured, meaning Saudi Electricity did not need to pledge any collateral, a source close to the deal told Reuters.
With state revenues slashed by low oil prices, Saudi Arabia's government and state-run firms are increasingly turning to borrowing to fund themselves.
The low oil price environment provided an opportunity for liquid Chinese banks to chip in with funding at a time when liquidity was more constrained in the region's financial sector, said Hongbin Cong, managing director, Invest Dubai at Falcon and Associates, a strategic advisory firm.
Since it opened a branch in Riyadh last year, ICBC has sought to position itself to benefit from economic reforms designed to cut Saudi Arabia's dependence on oil. Earlier this month, the kingdom unveiled a five-year plan which is to involve 270 billion riyals ($71.99 billion) of state spending on projects in housing, mining, renewable energy and other areas.
ICBC has the largest presence of any Chinese lender in the region, with offices in Riyadh, Dubai, Abu Dhabi, Doha and Kuwait.
Earlier this year it provided a $230 million unsecured loan to Emirates National Oil Co in the United Arab Emirates, and participated in a $1.7 billion club loan to Emirates NBD, Dubai's largest bank.
(Editing by Andrew Torchia and Susan Fenton) ((Tom.Arnold@thomsonreuters.com; +97144536265; Reuters Messaging: tom.arnold.thomsonreuters.com@reuters.net))
* One of the largest loans extended by a Chinese bank in Gulf
* ICBC opened branch in Saudi Arabia last year
(Adds detail, context)
By Tom Arnold and Maha El Dahan
DUBAI, June 30 (Reuters) - State-controlled utility Saudi Electricity Co (SEC) has obtained $1.5 billion in financing from Industrial and Commercial Bank of China (ICBC), one of the largest loans ever extended by a Chinese bank in the Gulf.
The loan from ICBC, the world's biggest bank by assets, underlines growing business ties between China and the region. In January, China and the six Gulf Cooperation Council nations said they aimed to conclude a free trade agreement this year.
The five-year "direct commercial funding agreement" was signed on June 29 and will be used to finance some of SEC's capital projects, the company said on Thursday without giving financial terms.
The loan was unsecured, meaning Saudi Electricity did not need to pledge any collateral, a source close to the deal told Reuters.
With state revenues slashed by low oil prices, Saudi Arabia's government and state-run firms are increasingly turning to borrowing to fund themselves.
The low oil price environment provided an opportunity for liquid Chinese banks to chip in with funding at a time when liquidity was more constrained in the region's financial sector, said Hongbin Cong, managing director, Invest Dubai at Falcon and Associates, a strategic advisory firm.
Since it opened a branch in Riyadh last year, ICBC has sought to position itself to benefit from economic reforms designed to cut Saudi Arabia's dependence on oil. Earlier this month, the kingdom unveiled a five-year plan which is to involve 270 billion riyals ($71.99 billion) of state spending on projects in housing, mining, renewable energy and other areas.
ICBC has the largest presence of any Chinese lender in the region, with offices in Riyadh, Dubai, Abu Dhabi, Doha and Kuwait.
Earlier this year it provided a $230 million unsecured loan to Emirates National Oil Co in the United Arab Emirates, and participated in a $1.7 billion club loan to Emirates NBD, Dubai's largest bank.
(Editing by Andrew Torchia and Susan Fenton) ((Tom.Arnold@thomsonreuters.com; +97144536265; Reuters Messaging: tom.arnold.thomsonreuters.com@reuters.net))
