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SABIC launches third Sukuk sale
Published in The Saudi Gazette on 04 - 05 - 2008

Saudi Arabian Basic Industries Corporation (SABIC) is set to raise a capital of SR5 billion from the issuance of its third Sukuk certificate, the subscription of which started on Saturday for a 10-day period.
Marketing and sales of SABIC Sukuk will take place within the Kingdom and select GCC markets to eligible GCC investors, with the final size and pricing determined after the completion of the book building process.
The Sukuk certificate will be available for subscription for a minimum of SR10,000 for a five-year period.
The CMA has approved the commencement of marketing of the issuance of third Sukuk certificate by SABIC. SABIC appointed Calyon Saudi Fransi Limited (CSFL) and HSBC Saudi Arabia Limited (HSBC) as joint lead managers and bookrunners of the Sukuk, Saad Al-Saif, senior manager, Investment Banking, HSBC, announced at a joint press conference in Riyadh on Saturday.
Firas Y. Chakra, CEO of Calyon Saudi Fransi Limited and Hissam Kamal Hassan, director, Islamic Banking, HSBC were also present.
The Sukuk certificate has a 20-year life, said Hissam Kamal Hassan, director, Islamic Finance HSBC.
He said after five years, investors, who would be mostly companies and entrepreneurs, may liquidate their Sukuk certificates and get back the principal amount.
Some of the institutional investors in Sukuk are pension fund, insurance companies, mutual funds and various banks, he said.
The price for SABIC Sukuk will be announced sometime this week and the final price early next week, he said.
Sukuk issue is very different from how an initial public offering (IPO) is marketed, he said, adding that the actual response for SABIC Sukuk would be known on the last day of the subscription.
Sukuk is the Arabic name for a financial certificate but can be seen as an Islamic equivalent of bond.
Hassan said the profit on SABIC Sukuk will be fixed depending on the demand but the its minimum price will remain at SR10,000. However, he added that the profit will be based on the Saudi Interbank Overnight Rate plus a certain margin depending on the demand for Sukuk issue.
The Sukuk issuance followed nine months after SABIC's second Sukuk offering that employed a similar structure originally developed by HSBC for the previous Sukuk and approved by the respected SABB Amanah Shariah Supervisory Committee.
The Sukuk, which will be listed on Tadawul, is denominated SR10,000 issued for a 20 year duration with a put option for investors after every 5 year period. The denomination and minimum subscription size of the Sukuk is SR10,000. __


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