HSBC leads €2 billion bond and loan issue for SABIC Group company

Comprising two components, a €750 million Eurobond and a €1.25 billion Syndicated Loan, SABIC successfully raised the funds across two successive transactions that were well oversubscribed.

The capital raising marks a new milestone for SABIC, following its groundbreaking SAR3 billion domestic Islamic bond (Sukuk) issuance in July 2006, the first raised by a Saudi corporate, and demonstrates the company's consistency and innovation in the capital markets. While the Sukuk distribution was restricted to domestic investors only, the Euro-denominated nature of the issuance by the European subsidiary, meant that a wider base of international investors could be tapped.

The geographic spread of investors in the SABIC Europe Eurobond shows the truly global appeal of Gulf debt, with the Middle-East accounting for 33%, continental Europe 37%, UK 24%, and Asia 6%. The tenor for the Eurobond is seven years.

Proceeds from the Eurobond will be used to refinance existing debt, fund the capital expenditure programme of the issuer and its subsidiaries, and for other general corporate purposes.

Mutlaq H. Al-Morished, Chief Financial Officer of SABIC, commented:
"This is a highly significant issue for SABIC, and for the region's corporates and capital markets. It considerably raises the profile of SABIC in the international Debt Capital Markets following our corporate sukuk earlier this year, and it gives us a clear indication of global investor appetite for our company and its prospects."

Commenting on the Eurobond issue, Rajiv Shukla, Director of Debt Finance for HSBC in Saudi Arabia added:
"SABIC's debut Eurobond was almost twice oversubscribed, allowing for tight pricing at levels commensurate with the issuer's expectations. No Saudi corporate has ever undertaken this level of innovation, and global investors recognise that SABIC and Saudi corporates in general have a strong growth story to tell."

Commenting on the €1.25 billion loan facility, Grainne Molloy, Director of HSBC's Debt Finance, said:
"The loan facility was 70% oversubscribed, and delivered strong interest from around the world. Banks and financial institutions are very keen to raise their exposure and connection with the Saudi economy, and SABIC is one of the most important corporates in the economy. 80% of the participants in the loan came from outside the Middle East, and 20% from the region, showing once again the high profile of regional issuers internationally."

HSBC's role in the latest transaction for SABIC demonstrates the bank's increasing capabilities in arranging integrated debt solutions across the Bond/Loan product spectrum in both Islamic and conventional finance, and further establishes HSBC as the dominant Debt House in Saudi Arabia and the Gulf.

SABIC Europe B.V. is a subsidiary of Saudi Basic Industries Corporation ("SABIC"), the largest public company by market capitalisation in the Middle-East, and the world's most profitable petrochemicals company. Current valuations give SABIC a market capitalisation of approx.US$70bn, while 2005 sales stood at US$21bn.