Washington, D.C., March 3, 2003—
The International Finance Corporation, the private sector lending arm of the World Bank Group, signed Sunday 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 Sami Haddad, IFC Director for Middle East and North Africa, “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.”
“We are delighted to be in a position to issue this bond, and we appreciate IFC's expertise in structuring this new instrument,” said Dr. Saleh Al-Omair, Chairman of the Board of SOLC. The SOLC bond is a three-year bullet repayment bond.
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.
Karl Voltaire, IFC Director for Global Capital Markets, said "IFC welcomes this opportunity to assist our client in the creation of this capital markets product that was specifically tailored to meet Saudi Orix Leasing Company's financing needs."
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.
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets,
helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
More information is available at:
www.ifc.org
and a Summary of Project Information is available at:
Saudi Orix Leasing Company – Project Information
