Saudi Aramco starts selling Sadara sukuk

18 March 2013

Sadara sukuk could up to a maximum of $2.5bn

Saudi Aramco has started marketing a sukuk (Islamic bond) that could be up to $2.5bn as part of the financing package for its $19.3bn Sadara Chemical joint venture with the US’ Dow Chemical.

According to the offering prospectus, the sukuk tranche of the Sadara financing will be a minimum of $1.4bn, but could be increased in size depending on demand for the deal from investors. The offering will be in Saudi riyals and will be made only to domestic investors, but is widely expected to be a “blow-out”, according to bankers close to the project.

If the sukuk is increased in size, then a bank tranche planned to be $2.6bn is likely to be decreased in size. The rest of the $12.6bn debt financing will come from $7.3bn export credit agency facilities and $1.3bn from the Public Investment Fund. Once the sukuk is in place, Aramco is expected to try to move quickly to close the rest of the project financing package, which has for a long time been held up by the uncertainty surrounding the bond.

The sukuk is being arranged by the local AlBilad, Alinma, and Riyad Bank, and Germany’s Deutsche Bank.

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