JEDDAH — The Saudi Electricity Company (SEC) is to issue a $1.333 billion (SR5 billion) sukuk (Islamic bond), the largest ever to be issued by a Saudi entity, according to a SEC statement made available to Khaleej Times here.
HSBC Saudi Arabia has been named as the lead manager and sole book runner in the agreement signed in Riyadh on Wednesday. "SEC is pleased to complete this landmark sukuk issue of $1.333 billion (SR5 billion) — the largest ever by a Saudi company. This successful sukuk issuance follows the recent (A+) rating assigned to SEC by Fitch and Standard & Poor's," said SEC Acting CEO Yousif Balghanaim.
SEC had earlier given a 10-day subscription period to investors during which the order book built up quickly to $1.866b (SR7b) — nearly three times SEC's issuance target of $666 million (SR2.5b). The overwhelming demand allowed SEC to issue sukuk worth 1.333b (SR5b) — the maximum permitted by Saudi regulatory authorities. The sukuk priced over 45 basis points over the benchmark, a figure that represents substantial savings from the cost of SEC's existing loans. Investors comprise a diversified mix pension, mutual funds, insurance and Takaful companies, corporate companies and banks (both Saudi and foreign).
The company's recent ratings and the new financing flexibility established through tapping the diversified capital market establishes SEC as a fundamentally strong credit-worthy institution.
"The company is determined to use this financial flexibility to support its endeavours in meeting the Kingdom's power needs through the provision of reliable and efficient services," Balghanaim said. He added that the company was proud to contribute to the development of the Islamic finance industry and capital markets through the issuance of sukuk in the Kingdom.