JEDDAH: SABIC Capital, an affiliate of petrochemicals giant Saudi Basic Industries Corp (SABIC), plans to issue a dollar-denominated, five-year benchmark bond, the group's chief financial officer said. SABIC, the largest listed company in the Gulf, has hired HSBC, JPMorgan and Royal Bank of Scotland as bookrunners for the bond sale, its Chief Financial Officer Mutlaq Al-Morished told Reuters on Monday. When asked how much the company expected to raise from the sale, al-Morished declined to give an estimate: “We shall see; it depends on the markets.” A typical benchmark bond is for a minimum of $500 million. The SABIC bond will be listed in London. SABIC said in May it was planning the bond issue before the end of June. Moody's ratings agency said then it would assign the bond an A+ rating and said the proceeds would be used to repay debt at SABIC Innovative Plastic Holding, formerly GE Plastics. But the chemicals firm later said it was “not desperate” to issue a bond, as jittery investors continued their sell-off in global markets. SABIC Capital was set up in 2008 to look after the financing and tax operations of SABIC's investments in Europe and the United States. SABIC shares were up 1.3 percent on the Saudi bourse at 0910 GMT. SABIC plans to sell five-year bonds that may be priced to yield “in the high 100 basis-point range” over the benchmark mid-swap rate. Bond transactions in the six-member Gulf Cooperation Council are recovering after concern Dubai World, the state- owned holding company, would default on $24.9 billion in debt raised loan costs for businesses, deterring borrowing. Sabic Capital, a unit of Saudi Basic, in May delayed a bond sale because of unfavorable spreads. The yield on SABIC's 4.5 percent, five-year euro- denominated bond maturing in November 2013 rose 3 basis points to 2.617 percent on Oct. 22, according to prices on Bloomberg. It reached a low for the year on Sept. 10 at 2.5 percent. “They are doing it because the market environment has improved,” Jarmo Kotilaine, chief economist at NCB Capital, said. “There is a lot of appetite for Gulf debt.'' Banks led by HSBC and Standard Chartered Plc advised on $9.4 billion of Gulf bond sales in the third quarter, the most since the last three months of 2009, according to data compiled by Bloomberg. Qatar Islamic Bank SAQ, the nation's biggest Shariah-compliant lender, sold $750 million of five-year debt on Sept. 30, and received orders for $6 billion. SABIC has $2.7 billion of debt maturing next year and $30 billion outstanding, according to data compiled by Bloomberg. Fitch Ratings rated SABIC's proposed guaranteed bonds an expected A+, the fifth-best ranking. Fitch Ratings has assigned SABIC Capital I B.V.'s proposed guaranteed bonds an expected ‘A+' rating. Fitch will assign the notes a final rating upon closure and receipt of final documentation materially conforming to the information reviewed. The net proceeds from the offering will be used to refinance existing borrowings of SABIC Capital I B.V. The proposed bonds will constitute direct, unconditional and senior unsecured obligations of SABIC Capital I B.V. and of guarantor Saudi Basic Industries Corporation (‘A+'/Stable/'F1'). The expected ‘A+' rating reflects the bonds' equal ranking with SABIC's senior unsecured obligations as a result of the guarantee provided. – Agencies SABIC Capital I B.V. is a private company with limited liability, incorporated under the laws of the Netherlands on 3 September 2008. The company is a 100%-owned subsidiary of SABIC and was set up to act as finance and investment vehicle for part of the SABIC group, in line with the group's stated aim to centralise its funding activities. Its revenues consist mainly of interest payments under loans to other SABIC group companies. __
