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Saudi’s Tasnee prices $533 million debut riyal Sukuk

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Saudi Arabia's National Industrialization Co (Tasnee) has priced a 2 billion riyals ($533.3 million) Islamic bond, or sukuk, the first time the petrochemicals firm has tapped the bond markets.

May 23, 2012 12:08 by



Saudi Arabia’s National Industrialization Co (Tasnee) has priced a 2 billion riyals ($533.3 million) Islamic bond, or sukuk, the first time the petrochemicals firm has tapped the bond markets.

The privately-placed, seven-year transaction was issued at par and carried a profit rate of 105 basis points over the six-month Saudi Interbank Offered Rate, a document from HSBC’s Saudi Arabian unit, which arranged the deal, said.

The issue attracted an order book of 5.2 billion riyals and was sold to government institutions, insurance companies, investment funds and banks, a Tasnee bourse filing said late on Tuesday.

Tasnee announced at the beginning of May it would meet investors ahead of a potential issue.

A number of Saudi entities have priced their first local currency sukuk this year as interest in the country’s debt market grows on the back of high investor liquidity and a desire to diversify funding sources away from bank loans.

The largest of these was a 15-billion riyals ($4 billion) issue from the General Authority for Civil Aviation (GACA) in January.

Diary firm Almarai Co and AJIL Financial Services Company completed deals worth 1 billion riyals and 500 million riyals in March and April, respectively.

($1 = 3.7503 Saudi riyals)

(Reporting by David French; Editing by Dinesh Nair)

c� =s�T P aning optimism about the summit drove shares, commodities and the euro down against the dollar, with the dollar index strengthening.

 

A stronger greenback can pressure dollar-denominated commodities such as oil by making them more expensive to consumers using other currencies.

The World Bank warned that Europe’s seething debt crisis could inflict even bigger damage if it worsens, with sluggish U.S. and European demand and a softening Chinese property market combining to weigh on the Chinese economy in the near term.

It also cut its economic growth forecast for China this year to 8.2 percent from 8.4 percent previously, adding that a slowing China will drag growth in emerging East Asia to two-year lows this year.

HIGH OIL INVENTORIES

U.S. crude oil inventories rose 1.5 million barrels last week, industry group the American Petroleum Institute said in a report late on Tuesday, further hurting oil prices.

Ahead of weekly reports on U.S. oil inventories, crude stocks were expected to have risen 1.0 million barrels last week, a Reuters survey of analysts showed.

The EIA’s weekly report is due on Wednesday at 1430 GMT.

Europe is also facing a glut of high quality crude oil grades, only a year after Libya created a serious shortage, as demand from the continent falls and the U.S. cuts imports due to greater domestic supply.

This has led to a steep weakening in values for many high quality sweet and low-sulphur grades, a rare development that suggests oil futures prices have room to correct further in an oversupplied market.

“In the short term, I’m quite bearish as ramped-up supply from Saudis and growing inventory in the United States shows the oil fundamentals are not that strong,” said Nunan.

Increased production from Saudi Arabia, Iraq and Libya has helped push U.S. crude oil inventories to a peak and allowed Iran’s customers to seek alternative barrels in the face of tightening sanctions on Tehran.

ECONOMIC RECOVERY HOPES

But hopes for fresh economic stimulus from China and a moderate economic recovery in Japan capped losses in oil prices.

Chinese media reported on Wednesday that Beijing will stick to active fiscal and prudent monetary policies in a bid to sustain relatively fast economic growth, quoting Vice Premier Li Keqiang.

This followed a report on Tuesday that China would speed infrastructure investments.

As widely expected, the Bank of Japan has kept monetary policy steady on Wednesday, maintaining its view that Japan’s economy will resume a moderate recovery.

Also providing a bright spot, the latest data from U.S. showed the pace of sales of existing homes in April rose to its fastest in nearly two years and a falloff in foreclosures helped bring a surprise jump in prices



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