RIYADH: The pricing of a five billion Saudi riyals ($1.33bn) Islamic bond issue by Saudi Electricity was 160 basis points over the Saudi interbank rate (Saibor), the firm's top executive said yesterday.The pricing marks a sharp rise compared to Electricity's maiden issue of 5bn riyals in 2007 which was priced at 45 basis points above Saibor.
"The market changed. The conditions prevailing in the global credit markets are the cause for this rise but it is still a good pricing," Ali Saleh Al Barrak said.
He cited as an example a recent sukuk issue by a utility firm in Dubai which he said was priced at above 300 bps over the interbank lending rate there.
Electricity, the Gulf's largest utility by market value, yesterday ended a roadshow for its second sukuk issue which bankers have widely expected would be priced at between 50 and 99 bps over Saibor due to the turmoil on global credit markets.
The scarcity of quasi-sovereign debt instruments - that are either linked to the government or state run companies - was expected to raise appetite for Electricity's new sukuk to diversify exposure amid this crisis.
Barrak said the new five-year issue has raised at least 10bn riyals, but he declined to say how much the company ended up taking.
Bankers said the firm would take 7bn riyals.
Fitch Ratings has assigned the planned issue an expected 'AA-' rating.
Only institutional and individual investors resident in Saudi Arabia and with bank accounts in the kingdom were allowed to buy the five-year bonds. Electricity's sukuk issue is the first after the launch earlier this month of a bonds market in Saudi Arabia which will help diversify financing sources for rated firms amid tight credit conditions.
