Islamic finance deal of the year:
Saudi Electricity $2 billion 10-year and 30-year sukuk issuance
Lead managers: HSBC, Deutsche Bank
Several deals were worthy candidates for the overall award, but we have opted for one that united three key themes of the past 18 months: increasing tenor, deals from Saudi Arabia, and issues that are from neither sovereigns nor banks.
The two $1 billion tranches, one of 10 years and one of 30, marked several firsts. This was the first ever 30-year international sukuk, and the largest international debt capital market issue from any Saudi entity. In both respects, it will provide benchmarks for other borrowers to follow.
Saudi Electricity is 80% state-owned, but it isn’t the sovereign itself, so the pricing – just 150 basis points over 10-year treasuries, and 195bp over 30 years – was impressively tight. Even at these levels, demand was high, topping $13 billion in the order book.
The deal was also striking for the range of places it sold to. There was a time when a deal like this would have gone only to the Middle East, but that region made up 49% of the 10-year deal and only 25% of the 30.