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Aramco venture raises $2 billion

AL KHOBAR: Sadara Chemical Company, a joint venture between Saudi Aramco and Dow Chemical, raised 7.5 billion riyals ($2bn) from the sale of an Islamic bond to fund a large petrochemical complex in the east of the kingdom.

The sukuk, which has a lifespan of 16 years, was priced at 95 basis points over the six-month Saudi interbank offered rate (Saibor), a statement from Sadara said yesterday.

The sale is part of a $12.5bn debt to fund the construction of the project, which will produce more than three million tonnes of petrochemicals each year when completed in 2016.

The $19.3bn facility, located at Jubail Industrial City in Saudi Arabia's Eastern Province, will be the world's largest chemical complex ever built in a single phase.

Strong demand from investors in Saudi Arabia meant the sukuk's size was increased from the original target of 5.25bn riyals, which was covered 2.6-times.

Given the huge amount of liquidity local investors have to deploy and the limited number of sukuk instruments to invest in, a sukuk offering from an Aramco-linked entity was always going to attract high demand.

Sadara's prospectus, released at the launch of the transaction last month, said the firm could increase the amount raised to as much as $2.5bn-equivalent.

Deutsche Bank, Riyad Bank, Alinma Bank and Bank Al Bilad arranged the sukuk.

The sukuk is the second project finance sukuk sold in Saudi Arabia.

The first was the 3.75bn riyal issue in October 2011 from Saudi Aramco Total Refining and Petrochemical Company (Satorp), a joint venture between Aramco and France's Total.



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