Thursday, Oct 21, 2010
By Tahani Karrar-Lewsley
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Saudi Arabia-based Arab Petroleum Investments Corp., or Apicorp, may issue more conventional or Islamic bonds after successfully raising 2 billion Saudi riyals ($533 million) via its debut bond issue this week that was three times oversubscribed, the lender's top executive said.
"We are confident we will be able to issue bonds and sukuks in the future according to our needs," Apicorp Chief Executive Officer and General Manager Ahmad bin Hamad Al Nuaimi told Zawya Dow Jones in an exclusive interview in Dubai Wednesday.
The development bank, owned by the 10 member states of the Organization of Arab Petroleum Exporting Countries, or OAPEC, said Wednesday its debut bond was priced at 110 basis points above the Saudi Interbank Offered Rate, or Saibor, and will be callable after three years at the option of Apicorp. The bond will pay a quarterly coupon.
"The five-year bond witnessed extraordinarily high demand from investors in a remarkably short book-building period, resulting in a price that was tangibly at the lower end of the range," Apicorp said in an emailed statement Wednesday.
The bond was three times oversubscribed, with orders reaching SAR6 billion. Apicorp had to close the books at the end of last week due to oversubscription, Al Nuaimi said.
Apicorp in June received an 'A1' first-time issuer rating by Moody's Investors Service for long-term debt and a 'Prime-1' rating for short-term debt.
Proceeds from the bond will be used to further strengthen Apicorp's financing and equity portfolio in OAPEC's oil and gas industries which have an estimated investment potential of $615 billion, the bank said.
The lender, which held total assets to the tune of $4.1 billion at the end of 2009, may also launch Islamic bonds, or sukuk, in the future after opting for a conventional bond for its debut issue, Al Nuaimi said.
"We already have experience in financing Islamic transactions in the market hence issuing a sukuk is a possibility," he said, adding it was still too early to say which country and currency a follow-up bond would be issued in.
FUNDING
Apicorp, based in Damman, in Saudi Arabia's Eastern Province, will use the funds raised through the SAR2 billion bond to finance Apicorp's investment drive in line with its growth strategy for the next five years, while maintaining its strong capital adequacy, Al Nuaimi said.
"We have a five-year plan which is updated on a yearly basis. Our current direct investment portfolio has an estimated book value of $350 million and we plan to double it over the coming five years," he said.
Projects Apicorp will be financing will not be limited to the hydrocarbon industry or geographically as long as they are tied to the Arab world, he added.
"We are looking at alternative and clean energy, once we see a project with the right technology and good returns we will consider it," Al Nuaimi said. "We are deepening our investments in the Arab world and industry-wise we are diversifying within the energy sector, moving into power-intensive projects like power generation and aluminum smelters."
Apicorp's bond issue comes at a time when Middle East debt markets are staging a return after freezing up during the global financial crisis, with several corporates issuing, and many more gearing up for, new bonds following the successful launch last month of Dubai's first sovereign bond in almost a year.
Al Nuaimi said the overwhelming response to the company's first foray into the debt markets came from a wide range of investors including Saudi and Gulf Cooperation Council, or GCC, government agencies, corporate treasuries and insurance companies.
Though the transaction was essentially marketed to Saudi-based investors, it also attracted interest from GCC investors and affirmed investor's confidence in Apicorp's long-term financial stability, profitability and credit quality, he added.
The bond was placed with institutional investors via an issuance co-ordinated by Credit Agricole Corporate and Investment Bank and the joint lead managers and book runners, Calyon Saudi Fransi Ltd, GIB Financial Services LLC, HSBC Saudi Arabia Ltd and Samba Capital & Investment Management Company Ltd.
The member states of OAPEC are Saudi Arabia, the U.A.E., Kuwait, Libya, Iraq, Qatar, Algeria, Bahrain, Egypt and Syria.
-By Tahani Karrar-Lewsley, Dow Jones Newswires; +9714 446-1692; Tahani.Karrar@dowjones.com
Copyright (c) 2010 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
21-10-10 0830GMT
