Sadara Chemical Co., a joint venture of Saudi Arabian Oil Co. and Dow Chemical Co., started selling an Islamic bond that may raise at least $1.4 billion to fund construction of a chemicals complex.
The sale of floating-rate securities in Saudi riyals is open only to Saudi nationals and institutions and will have a tenor of about 16 years, the Dhahran-based company said in an e-mailed statement today. Investors will receive a payment every six months equivalent to the six-month Saudi Interbank Offered Rate plus a margin to be decided later.
The size of the Islamic bond, or sukuk, is 5.25 billion riyals ($1.4 billion), although it may be increased to as much as $2.5 billion depending on demand, according to the sukuk prospectus. Other sources of funding will be scaled back if the issue exceeds the initial target.
Sadara is building the chemicals complex at the Saudi port of Jubail in the Eastern Province of the kingdom, which will be the world’s biggest erected in a single phase. The first units of the chemicals facility will begin production in the second half of 2015 and full completion is expected in 2016.
Funding for $19.3 billion project also includes $6.8 billion of equity, $7.3 billion of export credit agency loans, $1.3 billion of facilities from Saudi Arabia’s Public Investment Fund and $2.6 billion of bank loans, according to the prospectus. Subscription to the issue will close no later than three business days after March 30, according to the prospectus.
AlBilad Investment Co., Alinma Investment Co., Deutsche Securities Saudi Arabia LLC and Riyad Capital are managing the sale.