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Saudi Electricity to raise $2 bln with dual-tranche sukuk with green tranche
Saudi Electricity Company , majority owned by the sovereign Public Investment Fund, is set to raise $2 billion from a sale of dual-tranche Islamic bonds, a bank document on the deal showed on Monday.
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The company’s offer is made up of 10-year green sukuk and 30-year conventional Islamic paper, the document showed.
Orders for the 10-year tranche topped $9.2 billion and the 30-year tranche drew more than $6.2 billion in demand, both excluding interest from joint lead managers, the document said.
The Kingdom’s electric transmission provider launched $1.2 billion in 10-year green sukuk at a spread of 120 basis points (bps) over US Treasuries and $800 million in 30-year conventional sukuk at 205 bps over UST.
The spreads were tightened after higher-than-expected demand of $15.4 billion for both tranches. Initial guidance was for a spread of around 165 bps over UST for the 10-year notes and around 240 bps over the same benchmark for the 30-year Islamic bonds.
The huge demand was due to investors looking to buy sukuk, a market that has long had a supply-demand imbalance, as well as a relative dearth of corporate issues from the Gulf region that is benefiting from high oil prices, a person familiar with the matter said.
The demand was “not entirely regionally-focused, it was actually quite widespread,” the person said, adding Saudi Electricity had not issued bonds in over two years.
Saudi Arabia’s Al Rajhi Bank, the world’s biggest Islamic bank, sold $1 billion in five-year sustainable sukuk last week.
HSBC, JPMorgan and Standard Chartered are joint global coordinators for Saudi Electricity’s sukuk sale.
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