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Apicorp Plans More Bonds After 2 Billion-Riyal Issue

Oct. 20 (Bloomberg) -- Arab Petroleum Investments Corp., an energy investment unit of the Organization of Arab Petroleum Exporting Countries, may issue more bonds next year after raising 2 billion riyals ($533 million) from its first offering.

The Al-Khobar-based company plans to a second round of bond sales “depending on the company’s investment needs,” Chief Executive Officer Ahmad al-Nuaimi said in a telephone interview today.

“We are very encouraged by the appetite in the market for our debut bond, but any subsequent issue is likely to be next year,” al-Nuaimi said. “We may also consider sukuks as we are already using Islamic finance instruments.”

Apicorp’s debut bond issue drew orders for six billion riyals, the company said in an e-mailed statement today.

The five-year debt maturing in October 2015 was priced to yield 110 basis points, or 1.1 percentage points, more than the Saudi riyal interbank offered rate, the company said. The securities are callable after three years.

Companies in Saudi Arabia, the world’s biggest oil exporter, are stepping up bond sales to help finance expansion plans. The government is seeking to revive the economy with a $400 billion, five-year stimulus package that includes investments in education and renewable energy.

Double Investment

Calyon Saudi Fransi Ltd., GIB Financial Services LLC, HSBC Saudi Arabia Ltd. and Samba Capital & Investment Management Company Ltd. managed the offering. Credit Agricole Corporate & Investment Bank was the coordinating bank on the sale. The debt is rated a provisional A1 by Moody’s Investors Service, the fifth-highest investment grade ranking.

Arab Petroleum will use the proceeds from the debt sale to double its investment in oil and gas over the next four years, al-Nuaimi said. The company’s investment portfolio was $257 million at the end of 2006.

“We are in the process of identifying opportunities for investments this year and next year,” he said without giving further details. “We are currently at a very mature stage of the feasibility studies for some projects.”

The company also plans to exit some of its investments.

“We have identified three investments that we plan to exit from,” al-Nuaimi said. “It’s still premature to talk about details.”

To contact the reporter on this story: Stefania Bianchi in Dubai at sbianchi10@bloomberg.net

To contact the editor responsible for this story: Edward Evans at Eevans3@bloomberg.net.

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