SEC issues largest sukuk of 2009 so far

Published: August 18, 2009

Saudi Electricity Company (SEC) has issued a SR7bn (US$1.87bn) sukuk, the largest sukuk issue globally to date in 2009 and the first public issuance of 2009 in Saudi Arabia.

HSBC Saudi Arabia and Samba Capital were joint lead managers on the deal, with the securities receiving an 'AA-' rating from Fitch. The structure of the sukuk is similar to SEC’s 2007 SR5bn sukuk. The deal involves the transfer by SEC of a portfolio of assets to a custodian, Sukuk Electricity Company, a wholly-owned subsidiary of SEC.

The asset portfolio comprises the rights granted to SEC under a Saudi Arabian council of ministers resolution to provide electrical service connections and to levy and receive a one-time charge for each connection.

The sukuk is issued on an unsecured and unsubordinated basis and has an effective maturity of July 2014.

Proceeds raised through the issue will be used by SEC for general corporate purposes, including working capital requirements, refinancing of existing obligations and the implementation of an investment programme targeted at expanding capacity and optimising the grids to safeguard security supply.

Legal advisers were Allen & Overy and its affiliated office in Riyadh, Abdulaziz AlGasim Law Firm.