Saudi Electricity Company (SEC) has closed a SR7bn ($1.9bn) sukuk (Islamic bond) issue at 95 basis points above the Saudi interbank offered rate (Sibor) with a tenor of seven years, with proceeds being used to fund its expansion plans.
The deal was significantly oversubscribed with an orderbook size of SR27bn, a clear measure of the liquidity in the Saudi banking system at present.
The funds were raised from Saudi financial institutions, although branches of offshore entities comprised a little under five per cent of final allocation.
The UK’s HSBC and the local Samba Capital acted as joint lead arrangers/bookrunners and sole ratings advisors (MEED 6:05:10).
“This is a large deal, done against a tough economic backdrop,” says Mohammed Dawood, director of debt capital markets at HSBC Amanah, the Islamic arm of HSBC.
Rajiv Shukla, head of global capital financing for HSBC Saudi Arabia, added: “There’s clear investor interest in Saudi Arabia for high-quality sukuk denominated in riyals. The sign of increased confidence in such deals is the tighter pricing and larger orderbook, even with lengthened tenor.”
This sukuk is the latest in a number of deals HSBC Saudi Arabia has helped close for SEC. Prior to this, in July 2009, it acted as joint lead manager and joint bookrunner for SEC’s SR7bn five-year sukuk issuance, the first public issuance in the local market in 2009.