Saudi Basic Industries Corp, the world's largest petrochemicals maker by market value, priced a $1 billion five-year bond on Thursday, with investor demand high for a rare dollar-denominated debt offering from a Saudi entity.
The transaction, the company's first bond market visit since 2010, attracted commitments from investors worth $5.25 billion, according to a document from lead managers released earlier in the day.
The level of demand allowed pricing for the deal to be tightened twice on Thursday, initially going to 135 basis points, plus or minus 5 bps, over the equivalent US Treasuries and then to 130 bps over the same benchmark. Initial pricing guidance on Wednesday was 150 bps over.
Proceeds from the deal, which carries a 2.625 percent coupon and has an reoffer price of 99.559, will be used to repay existing debt and to fund its operations in the United States, the document from lead managers said.
SABIC's bond was always likely to attract high demand from international fixed-income investors, given its blue-chip status and the rarity with which Saudi entities print dollar deals.
Two others have priced in 2013 - from Dar Al Arkan Real Estate Development Co and Saudi Electricity Co - while only two deals were completed in 2012.
Saudi issuers have traditionally relied on the country's highly liquid local finance sector because of the bountiful cheap cash it can provide, from both bank loans and institutional investors.
However, as Saudi companies have looked to expand outside the kingdom, and hit limits in terms of how much banks can lend to one firm, they have explored other financing avenues, including international fixed-income investors.
Citigroup Inc, HSBC Holdings, Mizuho and Royal Bank of Scotland were the lead managers on the deal, sold through the firm's SABIC Capital unit.