Saudi Electricity Co. (SEC) priced a $1.75 billion two-part Islamic bond Wednesday, putting its $500 million five-year portion at a fixed profit rate of 2.665 percent and its $1.25 billion 10-year tranche at 4.211 percent. Saudi Electricity's launch of the two-part bond earlier this week marks the first dollar-denominated issue from Saudi Arabia since October 2010, when petrochemicals group Saudi Basic Industries Corp. (Sabic) launched a $1 billion five-year bond. The $500 million five-year portion was launched at a spread of 140 basis points (bps) over midswaps, from 160 bps over midswaps indicated earlier. The $1.25 billion 10-year tranche launched at 195 bps over midswaps, tightening from around 210 bps earlier. HSBC and Deutsche Bank were the mandated lead arrangers on the deal, while Mistubishi Securities UFJ came in as a co-lead on Wednesday. Another Saudi group, Kingdom Holding received shareholder approval Wednesday to sell bonds worth up to SR3.75 billion ($1 billion). Demand for the bond was seen being very strong, given the rarity value of a dollar sukuk from a majority government-owned Saudi corporate. The company's big investment needs over a long-term period allowed it to add a rare 10-year portion to its sukuk, which would appeal to global investors. The company, rated AA- by Standard and Poor's, can be seen benefiting from a high probability of state support, as Saudi Arabia's national electricity provider. Investors will be further reassured by the inclusion of a change of control put clause if government ownership or control falls below 50 percent.
