Meed | Saudi Electricity Company sells bonds to fund capex

Saudi Electricity Company sells bonds to fund capex

4 April 2023

Saudi Electricity Company (SEC) plans to issue US dollar-denominated Islamic bonds to support its $8bn-plus capital expenditure (capex) plans for 2023.

SEC, which is almost 75 per cent owned by the Public Investment Fund, has hired HSBC, Standard Chartered, JPMorgan Securities, First Abu Dhabi Bank, MUFG Securities, Mizuho, SMBC Nikko, SNB Capital, Al-Rajhi Capital, Saudi Fransi Capital, Abu Dhabi Islamic Bank, Bank of China, Abu Dhabi Commercial Bank, Natixis and Societe Generale as joint lead managers for the debt sale.

SEC said proceeds from the sukuk will be used for general corporate purposes, including capex, or, if issued as green sukuk, to fund eligible projects under the company's green sukuk framework.

SEC became the kingdom's first issuer of green bonds in 2020 when it raised $1.3bn from the sale of a two-tranche green sukuk.

In March, MEED reported that SEC plans to allocate between SR30bn ($8bn) and SR35bn ($9.3bn) for capex in 2023.

This range is at least 10 per cent higher than the company's capex of SR27.4bn in 2022, based on figures published in its 2022 financial presentation.

The lower range of the expected 2023 capex is about 8.5 per cent lower than the figure reported in 2022, the highest reported capex by SEC over the past three years. The higher range exceeds this figure by 7 per cent.

The utility did not provide a specific breakdown of the planned expense, although spending in transmission and distribution infrastructure has dominated the previous three years' capex.

It indicated plans to grow its fleet, further expand its distribution and transmission pipelines, and reach 23 per cent automation in its distribution grid.

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Colin Foreman