APICORP re-energises Sukuk market with oversubscribed $500 million issuance

Dammam, Kingdom of Saudi Arabia – Thursday 22nd October 2015: The Arab Petroleum Investments Corporation (APICORP) has successfully placed a USD 500 million, five year Sukuk as part of its USD 3 billion Sukuk programme announced last July.

APICORP’s transaction represents the largest inaugural Sukuk issuance by a supranational issuer. It is also the first inaugural issuer from the GCC to announce and price its transaction intraday.

The deal was favourably priced with a profit rate of 2.383%, which equated to USD mid-swaps plus 100 basis points at the time of pricing. The total order book for the issuance was USD 832 million, meaning it was roughly 1.7x oversubscribed, with over 40 participating investors. The Sukuk saw approximately 20% participation from Asia and Europe, with strong interest across all asset classes.

The transaction marks a strategic step forward for APICORP in becoming a regular issuer of Sukuk in the global markets, and positions the company’s credit alongside its multilateral development bank peers.

Commenting on the deal, Dr Aabed Al Al-Saadoun, Chairman of the board of APICORP said: “We are delighted with the level and quality of interest in our inaugural Sukuk issuance, and of course with the attractive pricing secured. This is testament to APICORP’s impressive 40 year track record, unique ownership structure, strong fundamentals, and reassuring Aa3 credit rating.

“This deal provides APICORP with more diversified sources of funding, reduces our overall cost of financing, and extends our debt maturity profile. The financing benefit it brings enables us to more effectively deliver against our mandate to foster the development of the Arab energy sector. We will be able to extend attractive financing terms to our clients and partners, as well as improving our ability to participate in financing strategic energy-related projects, which may not immediately attract the commercial banks.”

As the first transaction from a GCC based entity post-summer, the successful APICORP Sukuk may also help pave the way for other issuers from the region to access the international capital markets.

Goldman Sachs International and Standard Chartered Bank acted as Global Coordinators for the Sukuk issuance, which will be listed on the Irish Stock Exchange followed by Nasdaq Dubai in the near future, and is provisionally rated by Moody’s Investor Services.

APICORP is a multilateral development bank established in 1975 by the 10 member states of the Organisation of Arab Petroleum Exporting Countries (OAPEC). The organisation celebrates its 40th anniversary this year and it hosts the influential APICORP Energy Forum, which will be attended by four regional energy Ministers, on 19th November in Bahrain.