March 17, 2013 / 12:10 PM / 5 years ago

UPDATE 1-Saudi Aramco, Dow petchem venture launches sukuk sale

DUBAI, March 17 (Reuters) - Sadara Chemical Company, a joint venture between Saudi Aramco and Dow Chemical , launched an Islamic bond sale that could raise at least $1.4 billion to finance a large petrochemical complex in the east of the kingdom.

The $19.3 billion facility, located at Jubail Industrial City in Saudi Arabia’s Eastern Province, will be the world’s largest chemical complex ever built in a single phase.

Sadara may increase the size of the planned sukuk to $2.5 billion depending on market demand, it said in a prospectus for the sale, adding if the company raises more than $1.4 billion other sources of financing will be adjusted accordingly.

Pricing of the sukuk, which is only available to Saudi investors, will be determined once roadshows have taken place. The sukuk has a 16-year lifespan, the company said in a statement.

The sukuk forms part of a $12.5 billion debt package currently being raised to fund the construction of the project, which will produce more than 3 million tonnes of petrochemicals each year when completed in 2016.

Of the total, $4.975 billion has been provided by the U.S. Export-Import Bank - the largest direct loan ever given by the agency to a single project.

Deutsche Bank, Riyad Bank, Alinma Bank and Bank Al Bilad have been mandated to arrange the sukuk, the statement said. Sources told Reuters in June the banks had been chosen, with the offering earmarked to raise around $1.4 billion-equivalent.

Once sold, it will be only the second project finance sukuk ever sold in Saudi Arabia - the first was the 3.75 billion riyals ($1 billion) issue in October 2011 from Saudi Aramco Total Refining and Petrochemical Co (SATORP), a joint venture between Aramco and France’s Total.

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