State-owned Saudi Basic Industries Corporation (Sabic) has mandated three banks to help the company raise a bond expected to be around $500m.
Sources close to the deal say the company has mandated the UK’s HSBC, Royal Bank of Scotland and the US’ JP Morgan.
The deal will be denominated in dollars and a road show for investors will start in London on 20 May, visiting Frankfurt, UAE, Singapore and ending in Hong Kong on 25 May. The deal should then be priced and issued before the end of the month.
Although the minimum size expected to be raised is $500m, the final issue could be bigger if demand from investors exceeds $500m. One bond analysts says, “There is a lot of appetite for Middle East credits and Saudi Arabia in particular because of the country’s strong economy. I expect it to have a large oversubscription.”
The bond is expected to be used to repay debt on subsidiary Sabic Innovative Plastics, which currently has debt levels of around $7bn according to ratings agency Standard & Poor’s. Sabic Innovative Plastics was launched following the company’s $11.6bn acquisition of the US’ General Electrics plastics division in May 2007.
The bond will be issued by subsidiary Sabic Capital. Sabic is 70 per cent owned by the government of Saudi Arabia.