Almarai, the Saudi food producer, is considering tapping global debt markets for about US$500 million as it seeks to expand in the US, Argentina and Ukraine.
The company plans to sell the bonds in the next 12 months to diversify its funding sources and to invest in facilities, overseas farms and its distribution network, chief financial officer Paul-Louis Gay said in Riyadh on Wednesday. The debt may be an Islamic bond or a hybrid sukuk, he said.
Almarai, Saudi Arabia's largest food producer, said in April it raised 1.3 billion Saudi riyals from the private placement of Islamic bonds with investors in Saudi Arabia. The sale was part of a 2.3bn-riyal sukuk programme it set up last year. Almarai has a 15.7bn-riyal, five-year investment programmed to boost output and develop products.
Companies and governments in the six-nation Gulf Cooperation Council are tapping the Islamic bond market as borrowing costs decline. The average yield on sukuk in the region has fallen 68 basis points in the past 12 months to 3.23 per cent May 7, according to the HSBC/NASDAQ Dubai GCC US Dollar Sukuk Index. Sales in the region have reached $9.5 billion, little changed from the year-earlier period.
* Bloomberg News