Saudi based Alinma Bank said it would grant a $1 billion credit facility to Saudi Basic Industries Corp (SABIC), plugging a financing gap at the world's biggest petrochemicals group.
In a statement confirming a report by Al Hayat online news service on Tuesday, Alinma said: "The facility will fund some of SABIC's petrochemical projects as part of its strategic plans to enhance financing performance, boost competitiveness and help it achieve (its) expansion and growth strategy."
It did not disclose the terms of the facilities, saying only they complied with Islamic law.
Alinma was set up by royal decree in 2006. Government owned pension funds are its biggest shareholders with a 30 percent stake while Saudi citizens hold the remaining 70 percent.
SABIC Chief Executive Mohamed al Mady declined to comment while Chief Financial Officer Mutlaq al Morished could not immediately be reached for comment. Alinma said Morished signed the agreement on behalf of SABIC.
SABIC's financial arm SABIC Capital delayed last month a benchmark dollar bond issue due to jitters that hit global credit markets over fiscal problems in some euro zone countries.
It was not immediately clear if there was a link between the Alinma deal announced on Tuesday and the delay in SABIC Capital's delayed bond issue.
Ratings agency Moody's assigned the planned bond an A+ rating and said it understood it would be used to refinance or repay debt at SABIC Innovative Plastics Holding, the renamed GE Plastics.
SABIC Capital was established in 2008 to look after the financing and tax operations of SABIC's investments in Europe and the United States after the acquisition of DSM Petrochemicals and GE Plastics.
Between July 2006 and May 2008, state controlled SABIC raised 16 billion riyals ($4.27 billion) from three Islamic bond issues. It raised $533.2 million in December 2009 from a private bond placement.
A typical benchmark bond issue is for a minimum $500 million. SABIC said that it has to repay $1.47 billion in long term loans in 2010 and $3 billion in 2011. (Reuters)For all the latest Saudi Arabia news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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