LONDON, May 11 (Reuters) - Saudi Electricity Company (SEC) is in the market for a US$1bn syndicated loan, banking sources close said.
The company has sent out a request for proposals for a five-year bullet loan, one of the sources said.
SEC had initially considered the bond market but decided to tap the loan market instead after bankers decided that changes to the electricity sector as part of Saudi’s national transformation program, called Saudi Arabia’s Vision 2030, which is aimed at diversifying Saudi’s economy away from pure oil dependency might make it too hard to sell to bond investors.
“Saudi Arabia’s national transformation programme is going to mean a lot of changes for the electricity sector,” another banker said. “If the conversation with investors is that the credit profile is this today, but might be something else tomorrow, then it can make the conversation difficult. I understand they are just going to be doing a loan.”
SEC did not immediately reply to a request for comment.
In June last year SEC signed a US$1.5bn five-year financing from Industrial and Commercial Bank of China, one of the largest loans ever extended by a Chinese bank in the Gulf.
In January 2016 it signed a US$1.4bn three-year revolving credit facility with a group of seven banks: MUFG, Mizuho Bank, SMBC, HSBC, JP Morgan, Credit Agricole and Deutsche Bank.
That US dollar tranche was part of a wider SR7.75bn (US$2.07bn) facility that also comprised a SR2.5bn tranche which signed in December 2015 with local lenders National Commercial Bank and Samba Financial Group. ($1 = 3.7504 riyals) (Additional reporting by Robert Hogg; Editing by Christopher Mangham)