Saudi Basic Industries Corporation (Sabic), the world's biggest chemicals company by market value, has won regulatory approval to sell Islamic bonds worth as much as SAR5 billion ($1.33bn), the Kingdom's stock market regulator said on Monday.
Islamic bonds, or sukuk, comply with Islam's ban on the payment or receipt of interest, and returns are derived from underlying physical assets.
The approval was posted on the Saudi bourse website. Mutlaq Al Morished, Sabic's chief financial officer, did not answer a call to his mobile phone seeking comment.
In July last year, the firm said it planned to raise up to $5bn (Dh18.36bn) through a programme of Islamic bonds to fund expansion. That month, the company sold sukuk worth $2.13bn.
There has since been a lull in sukuk sales after a global credit crunch triggered by defaults in United States home loans, but a handful of companies have come to market with sukuk offerings in recent weeks.
Global rating agency Standard & Poor's has assigned its "A+/A-1" long and short-term local currency corporate credit ratings to Sabic with a stable outlook citing the petrochemicals producer's leading market and cost position in basic and commodity chemicals.
The ratings agency also assigned "A+" local currency senior unsecured issue ratings to the SAR3bn Sukuk-I and SAR8bn Sukuk-II issued by Sabic.
The Saudi chemical giant last week announced slower profit growth than expected in the first quarter of SAR6.92bn, an increase of 10 ten per cent over the same period last year. HSBC had forecast SAR7.4bn profits of Sabic for the first quarter of the current financial year.
Sabic is expected to invest $5bn in Iraq as competition for energy at home forces it to search for cheap gas in riskier Middle East locations.
The Riyadh-based company is in talks with Iraq's government "to build a new factory to produce polyethylene and polyvinyl chloride", Faris Taha Abdul Hameed, Iraq's chemical industry director, said on the sidelines of a conference in Dubai last week. (Agencies)