The International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, has signed a riyal-denominated partial credit guarantee of up to $6.7 million for the first corporate bond issue in Saudi Arabia.
The guarantee will back a bond issue by Saudi Orix Leasing Company (SOLC) of up to $15 million equivalent, which IFC hopes will help start the development of the local corporate bond market. The Saudi Investment Bank is also acting as guarantor of the bond as well as issue advisor and market maker.
The company will use the proceeds of the bond to finance the growth of its leasing portfolio. Local small and medium enterprises, which play an important role in the Saudi economy, will be the main beneficiaries of the expansion of SOLC's business.
"This bond offering is significant for a number of reasons," said IFC Director for Middle East and North Africa, Sami Haddad, "not just for being the first corporate note in the Saudi market, but also because it will encourage other companies to issue such paper and result in the development of the local capital markets. At the same time it will help smaller businesses by expanding the leasing market."
The project is strongly supported by the Saudi Arabian Monetary Agency (SAMA), the country's central bank. IFC is working closely with SAMA to support its objective of promoting local bond issues.
SOLC was established in 2001 as the first specialized leasing company in Saudi Arabia. Both IFC and the Saudi Investment Bank are shareholders of SOLC. IFC holds a 10 percent stake, while the Saudi Investment Bank holds 28 percent. The Trade Development & Investment Group holds 32 percent, and Orix Group, Japan, holds the remaining 30 percent. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
