SECO Sukuk Orders Exceed $1.87 Billion, Banker Says

Saudi Electricity Co., the state- controlled power producer, received more than 7 billion riyals ($1.87 billion) in orders for this year’s largest Islamic bond sale, a banker familiar with the transaction said.

The five-year Islamic bonds, known as sukuk, may be priced to yield 160 basis points over the Saudi interbank rate, said the banker, who declined to be identified before the sale is completed. The utility paid 45 basis points over the Saudi benchmark in 2007 when it raised 5 billion riyals in its first sukuk sale, Bloomberg data show. A basis point is 0.01 percentage point.

Companies in the Arab world’s largest economy are seeking other ways to finance projects as the global crisis prompts banks to tighten lending. Saudi Arabia, which has the largest bourse by market value in the Middle East, started an electronic market for bond trading this month as part of its efforts to broaden sources of financing.