Saudi Arabia’s Advanced Petrochemical Plans Sukuk Investor Meetings

Saudi Arabia’s Advanced Petrochemical Co. will begin meeting investors from Sunday ahead of a potential sale of a sukuk denominated in riyals, it said on Wednesday.

The pricing, tenor and size of the Islamic bond to be offered will be determined based on market conditions, Advanced said in a statement published on the Kingdom’s bourse.

Funds raised from the issue, to be arranged by HSBC Saudi Arabia and the investment banking arm of Riyad Bank, would be used for general business purposes, it added.

Should Advanced complete an issue, it would be a debut sukuk transaction from the petrochemicals firm.

In the past, Advanced has relied on bank loans, including Islamic equivalents, to fund itself; last year it raised SAR200 million ($53.3 million) through a two-year murabaha, a common Islamic financing contract, for a housing project.

However, like many companies in the Kingdom, it is turning to the debt capital markets to take advantage of high liquidity in the Saudi investor market which has made finance cheap, while the authorities have been encouraging firms to issue sukuk to diversify funding away from bank loans and develop the local debt market.

The company said on Sept. 4 it planned to invest in a project worth around $1 billion to produce propylene in South Korea. The joint venture with South Korea’s SK Gas is due to start in the first half of 2016.