Saudi International Petrochemical Company "Sipchem" announced the successful closing of its first publicly listed Sukuk on June 29, 2011 of $480 million which was upsized from the initial $400 million due to the strong demand shown by investors.
The Sukuk provides Sipchem an alternate source to funding its projects using a Shariah-compliant Mudaraba structure.
A large number of investors expressed interest in the Sipchem Sukuk with total orders received in the range of $1.2 billion. The Sukuk is a Floating Rate Note for five years. The investors will receive an expected return of SIBOR plus 1.75% per annum to be distributed quarterly. The pricing was finalized at the low end of range of price guidance provided of SIBOR plus 1.75% again demonstrating the success of the transaction and the confidence of the investors in the Companys success.
Sipchems CEO, Ahmad A. Al-Ohali, commented that the successful completion of Sipchems first Sukuk issue will provide equity funding for the announced new projects and help Sipchem to achieve its short to medium term strategic plans. The substantial demand for the Sukuk, leading to an oversubscription of more than three times the target size, demonstrates the resilience of the Saudi Arabian economy and financial markets.
Among the investors participating were Government Institutions, insurance companies, investment and money market funds, financial institutions and individuals. Al-Ohali expressed his appreciation to all of those were involved in the transaction of particular Capital Market Authority, Deutsche Securities and Riyad Capital and our auditors and advisors for their diligent efforts in managing the transaction.