Saudi Electric plans $2.9 bln Islamic bond sales

RIYADH - Saudi Electricity Co. 5110.SE (SEC) may sell as much as 11 billion riyals ($2.9 billion) of Islamic bonds during the next 15 years to help finance expansion, Al Watan newspaper said, citing the CEO.

By (Reuters)

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Published: Tue 13 Mar 2007, 5:06 PM

Last updated: Sat 4 Apr 2015, 10:49 PM

Chief Executive Ali bin Saleh Al Barrak said the company will decide on its borrowing needs in April, according to Tuesday’s edition of Al Watan. The newspaper did not give more details.

A company executive, who declined to be identified, told Reuters the value of the sales may range between 11 billion and 15 billion riyals, with the first scheduled for the second-half of this year.

‘We plan to issue sukuk worth 10 percent of the investment needed for the next ten years,’ the official in Riyadh said. ‘We have not decided yet on the number of tranches but they should not exceed five as they will have maturities of 5-10 years,’ he said, without giving details.

Islamic bonds are typically backed by physical assets that pay a dividend or rent to bondholders rather than interest, which Islam in equates with usury.

State-controlled SEC said in January it planned to invest 15.8 billion riyals this year to boost power generation, transmission and distribution capacity, including adding 1,609 megawatts of generating capacity by 2008.

Barrak has estimated that at least 150 billion riyals of investment is needed during the next decade to cope with rising demand for electricity in the world’s top oil exporter, which has a population of about 24 million.

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