SABIC to float Islamic bonds to raise SR 1 bln

29-Jun-06

The Saudi Basic Industries Corporation (SABIC) is to very shortly float its first Islamic bond (sukuk) to raise SR1 billion from the domestic market for its expansion program. Reliance on Islamic finance by SABIC is a major initiative for opening up the non-equity segment of the capital market. 25-33% of the Shariah-compatible funds in the GCC states are to be raised through Islamic finance, as per a recent announcement. To capitalize on the rapidly growing market for Islamic finance, HSBC has set up a full-fledged office staffed by 230 employees, and it enjoys a 28% share of all portfolio funds floated on the Kingdom's capital market. Recently, SABIC used the Shariah-compatible tool for financing its largest ever Greenfield project forming part of its $5 billion subsidiary, Yanbu National Petrochemicals Company (YANSAB). YANSAB and its advisers raised close to US$850 million by Islamic loans.