Wednesday, May 26, 2010

(Adds comments, detail, background.)

ABU DHABI (Zawya Dow Jones)--Saudi Electricity Co. (5110.SA), or SEC, plans to issue an Islamic bond, or sukuk, in the international markets by early next year, after three sukuk issues in the local market, a senior company executive said Wednesday.

"We are soon going to tap the international markets. It might not be this year, maybe beginning of next year," Ahmed Al Jogaiman, executive vice president for finance, said at a forum in Abu Dhabi.

"Our next step would be to issue an international sukuk," Al Jogaiman said, adding that the company wants "to go the international market with a comfortable position."

SEC hasn't set a size for the issue, as it awaits a 15 billion Saudi riyal ($4 billion) soft loan from the government that has already been approved and defines its cash needs, Al Jogaiman said.

The company earlier this month raised SAR7 billion in a seven-year sukuk issue, rated 'AA-' by Fitch. It issued a five-year, SAR7 billion sukuk last year and a five-year SAR5 billion issue in 2007.

Rated in line with Saudi's sovereign rating, SEC bond issues have emerged as proxies for government debt in the absence of sovereign issues, Fahad Abduljalil Al Saif, director of investment banking finance at HSBC Saudi Arabia, said at the event. HSBC was lead manager on all of SEC's sukuk issues.

The company "is considered to be the proxy for sovereign debt since the central bank isn't issuing its own debt," Al Saif said. "It's perceived as a vital corporate for Saudi economic stability."

In a presentation earlier Thursday, SEC's Al Jogaiman said the company needed to spend over SAR150 billion over the next five years as capital expenditure to meet power capacity needs driven by a surging population in the kingdom.

SEC has current generation capacity of 40,000 megawatts, with demand expected to grow at an average 7% per year, Al Jogaiman said.

"The country, in the next three or four years, is requesting much more capacity than in the past few years," he said.

-By Nour Malas, Dow Jones Newswires, +97150 2890223; nour.malas@dowjones.com

Copyright (c) 2010 Dow Jones & Co.

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26-05-10 1114GMT