Arab Petroleum Investments Corporation (APICORP), the multilateral development bank of the Organization of Arab Petroleum Exporting Countries, completed a three-year SAR2.5 billion (US$666.6 million) syndicated Murabahah facility on the 28th January 2012.
Utilization of proceeds
The facility will be used to retain and increase the bank’s medium-term funding. It also marks the first Shariah compliant transaction for APICORP. When announcing the transaction, Ahmad Hamad Al Nuaimi, the chief executive and general manager of APICORP, commented that the deal represents a continuation of the bank’s strategy to significantly strengthen its balance sheet; having issued a SAR2 billion (US$533.1 million) bond in October 2010.
According to its latest available annual report, the bank’s total liabilities and equity amounted to US$4.31 billion in 2010. Moody’s also recently reaffirmed APICORP’s credit ratings at ‘A1’ (long-term) and Prime 1 (short-term), with a stable outlook.
Structuring
The transaction was structured as a Murabahah-Tawarruq facility and was backed by commodities.
Ahmad Hamad also noted that the transaction is testimony to the banking community’s confidence in APICORP’s financial stability, despite the continued risk-averse lending environment. “APICORP’s robust capitalization and strong liquidity profile is backed by strong conservative banking fundamentals,” added Ahmad Hamad.
Participating banks
Saudi’s leading banks played a key role in the transaction; oversubscribing the facility and allowing APICORP to lock in competitive pricing of Sibor + 0.88%.
In addition to their role as mandated lead arrangers, Al Rajhi Banking & Investments Corporation, Banque Saudi Fransi (BSF), Riyad Bank and Saudi British Bank (SABB) were also principal advisors for the transaction. Riyad Bank was also the Murabahah facility agent for the transaction.
Legal and Shariah advisors
APICORP was advised by Latham & Watkins, while the mandated lead arrangers were advised by Allen & Overy.
The deal was overseen by the Shariah boards of the mandated lead arrangers.
Growing market for Islamic finance in Saudi
The transaction is among the latest Islamic financing in Saudi as Shariah compliant deals pick up speed in the kingdom, particularly following the General Authority for Civil Aviation’s US$4 billion Sukuk at the beginning of this year.
According to data from Dealogic, as at the 14th March, Saudi topped the table for Islamic financing by country; with facilities amounting to US$4.18 billion in the last 12 months.
SUMMARY OF TERMS & CONDITIONS
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APICORP Murabahah Facility SAR2.5 billion (US$666.6 million) 28th January 2012
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