ACWA Power’s maiden 7-year Sukuk issuance achieves lowest pricing amidst 1.8x oversubscription
- Transaction marks the lowest spread by any corporate or bank issuer in Saudi capital markets since 2017
- Sukuk offering in line with ACWA Power’s long-term ambitions and its growing portfolio of assets
Riyadh, KSA, 14 June 2021: ACWA Power, a leading Saudi developer, investor and operator of power generation and desalinated water plants in 13 high-growth markets, announced today that it has successfully raised SAR 2.8 billion, through a senior, unsecured floating Sukuk rate issuance with a 7-year tenor, under the Shariah compliant Mudaraba-Murabaha structure.
The issuance marks the company’s maiden entry into Saudi debt capital markets and saw significant interest from fund managers, government funds and insurance companies accounting for approximately 30% of the issuance and resulting in an oversubscription of 1.8 times over the issue size.
Initial price guidance had been pegged at 100-125 basis points per annum (bps pa) + 6 month SAIBOR. The oversubscription enabled ACWA Power to tighten pricing by 25 bps pa. The final 100 bps pa + SAIBOR pricing is the lowest spread secured in the Saudi capital markets by a corporate or bank issuer since 2017.
The transaction is ACWA Power’s first since the Public Investment Fund (PIF) became a 50% shareholder last year, as part of PIF’s strategy to enable the growth of national champions to become regional and global leaders, whilst also realising sustainable investment returns.
The success of the issuance is proof of the wider market’s faith in KSA’s bond market and ACWA Power’s strong credit fundamentals which have attracted a diverse pool of sophisticated investors. The issuance is also a vote of confidence from investors in our ability to capture large opportunities in Saudi Arabia and other growth markets, thanks to our de-risked and 100% contracted business model that is well diversified across different technologies and geographies
Through our winning end-to-end business model and the operational strength of our global portfolio, we are well-positioned to continue to generate long-term stable income and superior, predictable cash flows. The market has recognized and rewarded ACWA Power’s fundamental strength and growth outlook with a competitive final pricing for which we are grateful to our investors. ACWA Power is committed towards supporting the development of Saudi Arabia’s capital markets
This is a significant transaction for both ACWA Power and the Kingdom’s capital market in terms of timing, pricing, and from an investor diversification perspective. The success of this issuance, underpinned by favourable cost of funding and terms, marks a new phase in diversifying our company’s funding sources to cater for future growth, reinforcing our strong track record in delivering power and desalinated water reliably and responsibly to communities in the Kingdom and around the world
HSBC Saudi Arabia and Samba Capital acted as Joint Lead Managers and Bookrunners for the issuance, with HSBC Issuer Services also acting as Sukuk holders’ Agent and Payment Administrator. Norton Rose Fulbright (NRF)’s London and Riyadh offices acted as Issuer Counsel while the JLMs were advised by Allen & Overy and Khoshaim & Associates.