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
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