UPDATE 1-Saudi Basic to borrow up to $9 bln, mostly in U.S.

(Adds details, analyst comment)

DUBAI, July 11 (Reuters) - Saudi Basic Industries Corp. 2010.SE (SABIC) said it would start borrowing about $9 billion in the next month to pay for General Electric Co.'s (GE.N) plastics unit and raise most of the cash in the United States.

The debt would help SABIC raise its profile in the United States, the biggest petrochemical market, after its $11.6 billion purchase of Massachusetts-based GE Plastics.

The acquisition in May was the largest ever announced by a Gulf Arab investor and SABIC, the world's biggest chemical company by market value, said at the time it would borrow around 75 percent of the cost.

"We will raise it through a mix of bonds, bank loans, and institutional loans, mostly in the United States, because that is the deepest market," Mutlaq al-Morished, SABIC's chief financial officer, told Reuters on Wednesday.

"We will start in the next month."

SABIC had limited sales in the United States before it bought GE Plastics, which has a market share of about 60 percent, HSBC said in May.

"The spreads are quite attractive and borrowing there reinforces their position in the U.S. market," said Peter Hutton, head of research at HSBC in Saudi Arabia. "Their presence is reflected not only in their business but also in their corporate debt structure."

SABIC would also raise some funds in Europe and the Middle East to fund the purchase, Morished said, without giving details.

SABIC is selling $1.3 billion of Saudi riyal-denominated Islamic bonds this month, but Morished said that was to fund its general business activity and not the GE Plastics purchase.

SABIC is investing as much as $30 billion to boost output to 80 million tonnes per year by 2012 from 50 million tonnes last year.

The company would borrow about $20 billion of that amount, Morished said.

SABIC had negative net debt at the end of 2006 of about 33 billion riyals, Hutton said.

"Given the strength of their cash flows, they don't strictly need this debt, but there is a benefit of keeping yourself in the market," Hutton said. "It gives you flexibility in terms of your financial structure and keeps down your cost of capital."

In Europe and the United States, SABIC works with banks including Citigroup Inc. (C.N), JP Morgan (JPM.N), and ABN AMRO AAH.AS, Morished said.