10 April 2014
RIYADH - Saudi Electricity Company (SEC) has announced its successful completion of the pricing and issuance of the third international sukuk (Islamic bond) worth a total of $2.5 billion.
The issuance included two separate tranches of Islamic bonds - one is $1.5 billion with a maturity of ten years and a yield of four percent while the second one is valued at $1 billion with a maturity of 30 years and a yield of 5.5 percent. The yield for each tranche shall be paid every 6 months.
Saudi Electricity said in a statement that the decision was taken after a series of meetings with fixed income investors in the United States and Europe. SEC's announcement has jump-started its dollar-denominated Islamic bond issuance. The company has appointed Deutsche Bank, HSBC and JPMorgan to manage the sukuk.
On March 24, SEC announced the possibility of starting investor meetings in the US and Europe. HSBC and Deutsche Bank have arranged SEC's two previous international sukuk issues, including a $2 billion two-tranche deal in March which garnered orders from investors worth more than $17 billion.
Ziad Al-Shiha, chief executive officer of SEC, said that the state-owned utility plans this year to spend SR30 billion to increase production capacity. The company last week received SR49.4 billion interest-free loan from the government and raised SR4.5 billion from a local sukuk sale in February.
"The issuance of bonds has enabled the company to achieve its basic goals and expand the base of its international investors. Issuance of international Islamic bonds over the past three years has contributed considerably in strengthening SEC's financing," he said.
RIYADH - Saudi Electricity Company (SEC) has announced its successful completion of the pricing and issuance of the third international sukuk (Islamic bond) worth a total of $2.5 billion.
The issuance included two separate tranches of Islamic bonds - one is $1.5 billion with a maturity of ten years and a yield of four percent while the second one is valued at $1 billion with a maturity of 30 years and a yield of 5.5 percent. The yield for each tranche shall be paid every 6 months.
Saudi Electricity said in a statement that the decision was taken after a series of meetings with fixed income investors in the United States and Europe. SEC's announcement has jump-started its dollar-denominated Islamic bond issuance. The company has appointed Deutsche Bank, HSBC and JPMorgan to manage the sukuk.
On March 24, SEC announced the possibility of starting investor meetings in the US and Europe. HSBC and Deutsche Bank have arranged SEC's two previous international sukuk issues, including a $2 billion two-tranche deal in March which garnered orders from investors worth more than $17 billion.
Ziad Al-Shiha, chief executive officer of SEC, said that the state-owned utility plans this year to spend SR30 billion to increase production capacity. The company last week received SR49.4 billion interest-free loan from the government and raised SR4.5 billion from a local sukuk sale in February.
"The issuance of bonds has enabled the company to achieve its basic goals and expand the base of its international investors. Issuance of international Islamic bonds over the past three years has contributed considerably in strengthening SEC's financing," he said.
© The Saudi Gazette 2014
