SAUDI ARABIA: Islamic banks tap into the petrochemical industry as they partake in a US$1.06 billion Murabahah facility with TASNEE - IFN

SAUDI ARABIA: Islamic banks tap into the petrochemical industry as they partake in a US$1.06 billion Murabahah facility with TASNEE

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SAUDI ARABIA: One of the kingdom’s major petrochemical firms, the National Industrialization Company (TASNEE), is reported to have successfully procured a SAR4 billion (US$1.06 billion) Murabahah financing facility from several Islamic banks in the region. According to Mubarak Abdallah Al Khafra, the chairman of the company, the proceeds from the deal will enable TASNEE to fund future ventures and refinance existing debt. The Murabahah facility was provided by a consortium of banks: namely Riyad Bank, Al Rajhi Bank, Bank Albilad, Emirates NBD, Saudi British Bank, Samba Financial Group, Banque Saudi Fransi, and Saudi Investment Bank. Mubarak further stated that the deal reflects the strength of the Saudi economy and the capacity of the banking sector in funding major projects in the kingdom. Under the terms of the contract, repayment is to be completed within a period of eight years and made on semi-annual equal installment basis. TASNEE is also granted an additional year which serves as a grace period thereto. Incorporated in 1985, TASNEE is presently the second-largest producer of titanium dioxide in the world. As of the 30th June 2013, the company recorded a 40.38% decrease in net profits to SAR658.5 million (US$175.57 million) from SAR1.1 billion (US$293.29 million) in the corresponding period last year. The decline was attributed to the profit margin reduction in the titanium dioxide sector which was in turn due to a drop in selling prices. TASNEE last entered the market with a SAR2 billion (US$533.25 million) privately placed seven-year Sukuk issuance in May last year.