SPA — Saudi Electricity Company (SEC) announced the successful completion of a US$2 billion dual-tranche Sukuk the issuance consisting of Green and conventional tranches, under its international Sukuk program.
The green tranche raised $1.2 billion in a 10-year tenor at a fixed profit rate of 4.6% p.a., this tranche was priced at a spread of 120 basis points (bps) over 10 years US Treasuries, representing a 45bps tightening from announced IPTs. Furthermore, the conventional tranche raised US$800 million in 30-year tenor at fixed profit rate of 5.6% p.a., this tranche was priced at a spread of 205 basis points over 30 years US Treasuries, representing a 35bps tightening from announced IPTs. With such tight pricing, this Sukuk pricing is matching to the KSA sovereign Sukuk pricing.
On Thursday, March 30, 2023, the company announced its intention to hold meetings with fixed-income investors in preparation for a potential Sukuk issuance.
Following a virtual roadshow that received an overwhelming participation of international investors in Asia, Europe, and the Middle East and included organizing a Global investor call, SEC presented its investment case, the company’s sustainability ambitions, and the specifications of the potential green Sukuk were presented to global audience that included fixed income investors.
The order book for the issuance was opened on Monday, April 3, 2023, and closed on the same day, with a total order book value of 15.4 billion US dollars, with an oversubscription rate exceeding 7.7 times for both tranches. The order book is considered as highest order book for a regional Corp issuer in over a year. Furthermore, through the transaction SEC achieved the rare feat of issuing a 30-year Sukuk, which only a few issuers globally have been able to place in the markets.
The Sukuk issuance received strong demand from international investors with over 350 investors participating in the order book, including local and international financial institutions from more than 27 countries in Asia, Europe, and the Middle East.
Engineer Khaled Al-Gnoon, the president and CEO of SEC, commented on the successful issuance of the company’s Islamic Sukuk, saying “We are pleased with the great demand from international investors and their confidence in the investment case of SEC and its creditworthiness, the tremendous success of this issuance is a vote of growing confidence in Saudi corporates, the strength of the Kingdom economy and the prospect of its prosperity and development under KSA Vision 2030.
Furthermore, Eng. Al-Gnoon add “The issuance of these Sukuk is in line with the company’s strategy to diversify its sources of funding and grow its investor base in international markets, and it supports the company’s aspirations to finance its projects through innovative and sustainable financing solutions”
SEC has high investment grade credit ratings from international rating agencies, with credit ratings of A1, positive outlook by Moody’s, and A, stable outlook by Fitch and Standard & Poor’s.