Saudi Electricity two-part dollar sukuk to price Tuesday

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Saudi Electricity Co (SEC), the Gulf's largest utility, is expected to price a two-part Islamic bond, or sukuk, on Tuesday, lead managers said, with investor demand for the transaction already proving strong.

Order books for the planned ten-year and 30-year tranches are each in excess of $2.5 billion, a document from the managers said, ahead of the final day of investor meetings in London on Monday. Roadshows took place in the United States last week.

Both tranches are earmarked to be benchmark-sized, meaning they will be worth at least $500 million each.

The deal was always expected to be popular given its rarity value; it is a dollar deal from a quasi-sovereign Saudi Arabian borrower, at a time when the Saudi government doesn't issue international debt, and is a rare Saudi debt sale open to U.S. institutional investors.

The fact that the deal is also a sukuk sale in which U.S. buyers can participate adds to its rarity value, as most Islamic bond sales aren't 144a-compliant.

Earlier, initial price guidance was set at 175 basis points and 210 bps over equivalent U.S. Treasuries for the ten-year and 30-year portions.

Deutsche Bank and HSBC Holdings are arranging the roadshows and will manage the sukuk's sale.

State-owned Saudi Electric last tapped the international bond market in March 2012, pricing a $1.75 billion, two-part sukuk split between a $500 million five-year portion and a $1.25 billion tranche which had a 10-year lifespan.

The former was trading at a z-spread of 115 bps at 0915 GMT, while the longer-running tranche was at 151 bps, according to Thomson Reuters data.

The z-spread expresses relative value by calculating the number of basis points that need to be added to a zero-coupon yield curve to make the bond's discounted cash flows equal its present value.

Fitch Ratings affirmed Saudi Electric's AA- rating in February, citing high government ownership and its monopoly position despite weakening standalone credit fundamentals.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
The flood gates open

The flood gates open

Turkey’s new fondness for sukuk has been met with increasing...

"Sleeping giant" debt market awakes in Saudi Arabia

After years in which the growth of Saudi Arabia's bond market...

Gulf bond issuers see opportunity in Malaysia

Gulf bond issuers see opportunity in Malaysia

Gulf looks to tap Malaysian investors with ringgit issues; country...

Most Discussed
  • 10
    UAE teens among the highest for obesity rates

    Everyone in UAE knows that biggest is best.

    UAE may not light up the international league tables in standard of living, education standards, press... more

    Friday, 29 August 2014 4:20 PM - Proud UAEer
  • 9
    UK politician sacked over burka binbag jibe

    @kingkaiser - exactly! It's a very complex issue and I couldn't agree more. What we also hopefully can all agree on is that no woman should ever be mocked... more

    Friday, 29 August 2014 4:19 PM - Doug
  • 1
    Qatar 'ready to rebuild Gaza'

    Once again my greatest respect for Qatar, and shame on other Arab countries.
    more

    Friday, 29 August 2014 10:53 AM - Ralph Edelman