Saudi Electricity gets $1.3bln in country's first green bond sale

First Abu Dhabi Bank, HSBC, JPMorgan, MUFG and Standard Chartered arranged the deal, which received over $4.8bln in orders

  
Image used for illustrative purpose.

Image used for illustrative purpose.

Getty Images

DUBAI  - State-controlled Saudi Electricity Company (SEC), the kingdom's electric transmission monopoly, sold $1.3 billion in dual-tranche green sukuk, or Islamic bonds, the first public green issuance from the region this year.

It sold $650 million in a five-year tranche at 140 basis points over midswaps and $650 million in 10-year Islamic bonds at 170 basis points over midswaps, a document from one of the banks arranging the deal and seen by Reuters showed.

"It is the first-ever green sukuk, or bond, by a Saudi issuer," said Bashar Al Natoor, Fitch Ratings global head of Islamic finance, adding it was one of only a handful of green sukuk ever issued from the Gulf.

Islamic Development Bank, a Jeddah-based supranational entity, sold green sukuk last year and "sustainable" sukuk in June.

Green bonds are a category of fixed-income securities that raise capital for projects with environmental benefits, such as renewable energy.

The deal comes amid a flurry of debt issues, as Gulf borrowers - particularly governments - seek to plug finances that have been hit by the double blow of the coronavirus pandemic and lower oil prices.

"The thing to watch now is whether the momentum in sovereign issuance, which we've seen, is really going to trickle down to corporates or if this is a one-off," Al Natoor said.

First Abu Dhabi Bank, HSBC, JPMorgan, MUFG and Standard Chartered arranged the deal, which received over $4.8 billion in orders.

SEC tightened both tranches by 30 basis points from where it began marketing them earlier on Thursday.

Last month, SEC - the main electricity producer in Saudi Arabia with 81.1% indirect government ownership - said it had signed a 9 billion riyal ($2.4 billion) syndicated Islamic loan with local banks.

(Reporting by Yousef Saba; Editing by Jacqueline Wong and Alex Richardson) ((Yousef.Saba@thomsonreuters.com; +971562166204))

More From Islamic Finance