‘The final size and the tenor will depend on market conditions,’ he said. ‘We will see what the market wants on tenor: it could be five or maybe seven years. This is the start of a broader programme. It remains our intention to access international bond markets at a later date.’

Market sources say that HSBC and its local affiliate Saudi British Bankhave been awarded a lead managing mandate for the local currency bond issue. It is understood that JP Morgan Chase & Companyis frontrunner to win the ratings advisory, but that no final decision has yet been taken. ‘The timing is not 100 per cent decided, but with the capital markets law coming into effect there is an opportunity in the local market,’ said Al-Morished. ‘We are expecting the bond issue to be staged early next year.’

While two local corporate paper issues have been staged in Saudi Arabia – the first a SR 50 million ($13 million) conventional deal by Saudi Orix in 2003, and the second a SR 102 million ($27 million) sukuk by Hanco Rent-a-Carearlier this year – a bond issue by Sabic would stand as a milestone in the development of its debt capital markets.

Al-Morished added that, while the government has stated its intention to reduce its equity position in Sabic from 70 per cent to 25 per cent, no schedule or process for the divestment had be formalised.