RIYADH, 5 December 2006 — HSBC has acted as a joint lead manager and joint bookrunner for SABIC Europe B.V, the European subsidiary of Saudi Basic Industries Corporation, in raising 2 billion euros in debt for the company.
This was announced by Mutlaq H. Al-Morished, chief financial officer of SABIC, who said the 2 billion-euro bond comprising two components, a 750 million euros Eurobond and a 1.25 billion euros syndicated loan, enabled SABIC to successfully raise the funds across two successive transactions that were well oversubscribed.
The capital raising marks a new milestone for SABIC, following its groundbreaking SR3 billion domestic Islamic bond (Sukuk) issuance in July this year, the first raised by a Saudi corporate, and demonstrates the company’s consistency and innovation in the capital markets.
While the Sukuk distribution was restricted to domestic investors only, the euro-denominated nature of the issuance by the European subsidiary, meant that a wider base of international investors could be tapped.
Al-Morished said the geographic spread of investors in the SABIC Europe Eurobond shows the truly global appeal of Gulf debt, with the Middle East accounting for 33 percent, continental Europe 37 percent, UK 24 percent, and Asia 6 percent. The tenure for the Eurobond is seven years.
Proceeds from the Eurobond will be used to refinance existing debt, fund the capital expenditure program of the issuer and its subsidiaries, and for other general corporate purposes.
Commenting on the launch of the Eurobond, Al-Morished commented: “This is a highly significant issue for SABIC, and for the region’s corporates and capital markets. It considerably raises the profile of SABIC in the international debt capital markets following our corporate sukuk earlier this year, and it gives us a clear indication of global investor appetite for our company and its prospects.”
Commenting on the Eurobond issue, Rajiv Shukla, director of debt finance for HSBC in Saudi Arabia added: “SABIC’s debut Eurobond was almost twice oversubscribed, allowing for tight pricing at levels commensurate with the issuer’s expectations. No Saudi corporate has ever undertaken this level of innovation, and global investors recognize that SABIC and Saudi corporates in general have a strong growth story to tell.”
Commenting on the 1.25 billion-euro loan facility, Grainne Molloy, director of HSBC’s debt finance, said: “The loan facility was 70 percent oversubscribed, and delivered strong interest from around the world. Banks and financial institutions are very keen to raise their exposure and connection with the Saudi economy, and SABIC is one of the most important corporates in the economy. As many as 80 percent of the participants in the loan came from outside the Middle East, and 20 percent from the region, showing once again the high profile of regional issuers internationally.”
HSBC’s role in the latest transaction for SABIC demonstrates the bank’s increasing capabilities in arranging integrated debt solutions across the bond/loan product spectrum in both Islamic and conventional finance, and further establishes HSBC as the dominant debt house in Saudi Arabia and the Gulf.
