iyadh: Saudi Electricity would likely price bonds worth up to five billion riyals ($1.33 billion) at between 40 basis points and 49 basis points over the Saudi Interbank Offer Rate (Sibor), the lead manager said yesterday.
"The price guidance for Saudi Electricity Company's sukuk offering is, in terms of basis points range over Sibor, '40s'," said Hissam Kamal Hassan, director of Islamic Finance for HSBC in Saudi Arabia.
"The price guidance range is purely indicative and non-binding, and final pricing could be below the indicated range, depending upon final market conditions and investor demand," he said in an emailed reply to Reuters.
Electricity plans to raise between two billion and five billion riyals from the issue of sukuk.
Demand is very good, reflecting the quality of the instrument and Saudi Electricity's recent credit rating, though the order book closes on July 11 so we'll only know final demand then," Hassan said.
Elecricity got an A+ rating from Standard & Poor's and Fitch last month. HSBC is lead manager and sole bookrunner of the sale.
Only institutional and individual investors resident in Saudi Arabia and with bank accounts in the kingdom will be allowed to buy the bonds, which mature in five years.
The company will use the cash to fund expansion to meet surging demand for power, which could require a total investment of 190 billion riyals by 2015.
Saudi Electricity needs to increase generating capacity by 60 per cent by 2015 to meet demand for power in the world's top oil exporter, chief executive Ali Saleh Al Barrak told Reuters last month.
The company would invest around seven billion riyals a year of its own cash and raise the rest in either loans or Islamic bonds, he said.
With record oil revenues driving economic growth in Saudi Arabia, demand for power is growing seven per cent a year, Barrak said.