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UPDATE 1-Saudi Electric launches two-part $1.75 bln Islamic bond

Tue, 27th Mar 2012 16:09

DUBAI, March 27 (Reuters) - Saudi Electricity Co launched a $1.75 billion
two-part Islamic bond on Tuesday, with tighter pricing on both the five-and 10-year tranches, indicating strong demand for the first dollar-denominated issue from Saudi Arabia since 2010.

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.

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.

HSBC and Deutsche Bank were the mandated lead arrangers on the deal, which was expected to price on Tuesday.

(Reporting by Rachna Uppal; Editing by Reed Stevenson and Dan Lalor) Keywords: SEC SUKUK/

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