Fitch Ratings has assigned Saudi Electricity Company's (SEC) SR7 billion Sukuk issue a final ‘AA-' rating on Saturday. This follows the receipt of final documentation with terms and conditions conforming materially to information already received. The structure for the Sukuk is similar to SEC's 2007 SR5 billion Sukuk, which is also rated ‘AA-'. The transaction involves the transfer by SEC of Sukuk assets to a custodian, Sukuk Electricity Company, a wholly-owned subsidiary of SEC. The Sukuk assets comprise of rights to provide service connections and the entitlement to levy and receive a one-time charge for each connection. The Sukuk is issued on an unsecured and unsubordinated basis and has an effective maturity of 6 July 2014. Sukuk holders are entitled to a quarterly periodic distribution amount and can require the issuer to purchase their Sukuk after five, 10, 15 and 20 years and also following an event of default. If the option is exercised after five years, Sukuk holders are entitled to 100 percent of the face value of the Sukuk. The face value percentage reduces to 80 percent, 60 percent and 40 percent if the option is exercised after 10, 15 and 20 years respectively. Fitch therefore views the effective maturity as five years.
