SABIC to issue Islamic bonds to the tune of 1 bln riyals

09-Jun-06

To help finance expansion projects, Saudi Basic Industries Corp (SABIC) plans issue Islamic bonds of at least 1 billion riyals ($267 million). This will mark the first time a private Saudi company issues bonds. The revenue from the bonds will cover SABIC’s shares in the national petrochemicals company (Yansab) and Saudi Kayan. SABIC owns 55% of Yansab shares and 35% of the Kayan’s. Additional revenue will go towards financing other projects. The first issue, to test the market, will take place in June or July at the latest. In the first phase, bonds will be open to banks, governmental and semi-governmental institutions, such as the public investment fund. The price of the bonds will be determined by market demand. The public will not be able to buy bonds, because of a lack of a framework to organize the issue, similar to that of the stock market. The issuing of Islamic bonds in the local market will spread the growing financial liquidity and create another arena for investment. Saudi Capital Authority is considering issuing an organizational statute for bonds before the end of the current year. SABIC has established a new company, SABIC SUKUK, which will offer services to the bond it intends to issue. It appointed HSBC and SABIC Bank as financial consultants.