Saudi Electricity raises US$1.9bn

Published: May 11, 2010

State utility issues third bond since 2007 to fund growth.

Saudi Arabia’s state-controlled power company has raised almost US$1.9bn from a seven-year Islamic bond.

Saudi Electricity, which appointed HSBC and Samba Financial as joint lead managers for the offer, will use the proceeds to fund growth.

The sukuk was issued at 95 base points above Saudi Interbank Offered Rate (Sibor) and will start trading on the Saudi bond market before May 24, according to reports.

In April the company’s chief executive, Ali Saleh Al-Barrak, said the company intended to raise between US$1.3bn and US$1.9bn from a new issue.

This is the third offer made by Saudi Electricity since 2007. It raised some US$1.9bn then and the same amount from another issue last year. The previous bonds had tenors of five years, but for the current offer the company has raised this to seven.

About 95% of demand for the issue came from Saudi institutions with the other applications made by foreign investors.