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Saudi’s SEC raises $1.3bn from oversubscribed green sukuk

The high interest received from investors in the Middle East, Asia and Europe pushed the oversubscription rate to four times

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Saudi Electricity Company, Sec

Saudi Electricity Company has raised $1.3bn (Dh4.7bn) from its international green sukuk offering.

The dual-tranche Islamic bond generated a lot of investor interest attracting orders of more than $5.2bn, the Kingdom’s main power utility said on Sunday.

SEC sold five-year and 10-year dollar-denominated green sukuk, or Islamic bonds, to finance various green capital projects such as smart meters.

The bonds will be listed on the Irish Stock Exchange.

The kingdom’s electric transmission monopoly last week announced the sale of bonds in a two-part offering, denominated in US dollars. It's the first public green issuance from the region this year and the proceeds will be used for green-friendly projects.

The high interest received from investors in the Middle East, Asia and Europe pushed the oversubscription rate to four times, the company said in bourse filing on Sunday.

"The green sukuk issuance received high demand from international investors in the Middle East, Asia, and Europe," said SEC.

A total of 6,500 bonds, or sukuk, were issued, with the maturity set for five and ten years.

A fixed profit rate of 1.74 percent per annum was assigned for the five-year tranche and 2.413 percent for the ten-year tranche.

“[The] total orders value for both tranches [exceeded] 5.2 billion dollars,” the company said.

The proceeds from the sukuk sale will be used to finance eligible green projects that will help contribute to climate change mitigation, it said.

This includes procuring and installing smart meters, a method of creating potential energy consumption savings and potentially reducing or avoiding carbon emissions, according to the company.

Its roll-out of approximately 10 million smart meters started in January this year with full implementation expected by March 2021.

Other eligible projects include connecting renewable energy sources to the grid, with nine projects scheduled for completion between 2020 and 2021, it said.

SEC has a monopoly on the transmission and distribution of electric power in the kingdom.

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