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Tue 13 Sep 2011 06:18 PM

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Saudi Aramco, Total venture to raise $1bn sukuk

Islamic bonds will only be open to Saudi investors, final pricing expected Sept 28

Saudi Aramco, Total venture to raise $1bn sukuk
oil plant, chemical plant, oil and gas refinery, oil and gas plant

Saudi Aramco and France's Total are set to issue up
to SR3.75bn ($1bn) in Islamic bonds, or sukuk, with final pricing expected by
the end of the month, lead arrangers said on Tuesday.

The sukuk, open only to Saudi investors, will be
issued by Saudi Aramco Total Refining and Petrochemical Co (SATORP) to help
finance the Jubail refinery project. The company got regulatory approval for
the issue in August.

"It's up to SR3.75bn. It’s been offered in
Saudi riyals only to Saudi entities, could be less, but you can't exceed SR3.75bn,"
Usman Sikandar, director and co-head of investment banking at Saudi Fransi
Capital, said at an investor presentation.

He added that the sukuk would mature about 11 years
after completion of the refinery, expected in December 2013.

Deutsche Securities Saudi Arabia, Samba Capital and
Saudi Fransi Capital were appointed joint lead managers and joint bookrunners
for the sukuk.

"This is a very good project, it’s a secure
project, the sponsors are guaranteeing this, so the risk factor is very low and
it’s a good investment and there's a lot of cash in the kingdom," Fawwaz
Nawwab, Satorp chief executive told reporters.

The total estimated cost of the refinery is $14bn,
Satorp executives said.

Bankers said final pricing for the sukuk - which
will be calculated on the basis of six-month Saudi interbank offered rate -
would be released on Sept 28.

Final allocations are due to be completed on Oct 3, with
settlement expected on Oct 8.

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