Saudi Electricity Seeks $1 Billion Loan Amid New Projects
(Bloomberg) -- Saudi Electricity Co. is marketing a $1 billion loan, people familiar with the matter said, as the firm seeks to finance new projects, including the expansion of a power plant.
The lending facility will carry a five-year tenor, with Sumitomo Mitsui Banking Corp. acting as the sole mandated lead arranger and bookrunner for the deal, said the people, who asked not to be identified as the matter is private.
The loan is being syndicated to the broader market, and will pay an interest margin of around 85 basis points over the benchmark Secured Overnight Financing Rate, the people said. Proceeds will be used for general corporate purposes, they added.
The Saudi Electricity loan adds to signs of a growing need for financing in Saudi Arabia as the kingdom seeks to support spending on its $2 trillion economic transformation in the face of deeper budget deficits. Companies and banks have been seeking out new sources of funding, while Saudi Arabia’s government has been a top issuer of sovereign debt among emerging markets in recent years.
Saudi Electricity did not immediately respond to a request for comment.
The company has been expanding existing plants, such as the Qurayyah Independent Power Plant, and adding new projects to help meet Saudi Crown Prince Mohammed bin Salman’s ambitions to diversify the country’s energy mix away from crude oil.
Saudi Electricity’s net profit grew 7.9% to 968 million Saudi riyals ($258 million) in the first quarter from a year earlier, while revenue rose 23% amid rising demand.
The company is rated at A+ by both S&P and Fitch and carries a high-grade rating of Aa3 at Moody’s. Its shares are down about 15% so far this year on Saudi Arabia’s main stock exchange.
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