Aiming to diversify its funding sources and capitalise on the benefits of Export Credit Agency (ECA) financing solutions, Saudi Telecom Company (STC) closed its debut Export Credit Agency supported financing. The Shariah compliant export credit facility funds capital expenditures together with Swedish Telecommunication Company Ericsson for the development of a 5G network in the Kingdom of Saudi Arabia.
At the inception of this landmark financing are STC’s ambitions to confirm its leading position in technological advancement and digital services and to align with Saudi Arabia’s Vision 2030 ambitions.
With this transaction, STC was able to achieve its first export credit agency guaranteed financing along with extended door-to-door facility tenure at optimal terms and more importantly Shariah compliant.
Ameen Alshiddi, CFO, STC Group
BNP Paribas was one of the two co-arrangers for the $156 million facility guaranteed by Swedish export credit agency EKN and funded by the Swedish Export Credit Corporation (SEK). The facility is fully Shariah compliant and was arranged under a Commodity Murabaha structure with BNP Paribas as Agent.
Mr. Ameen Alshiddi, STC Group CFO, said: “With this transaction, STC was able to achieve its first export credit agency guaranteed financing along with extended door to door facility tenure at optimal terms and more importantly Shariah compliant. This transaction paved the way for new sources of funding, which is completely tailored to our needs in order to finance our Dare 2.0 Strategy.”
STC was able to lock the fixed interest rate at a perfect time, benefiting from a 20-year historically low USD Commercial Interest Reference Rates level.
As a result of extensive collaboration, BNP Paribas, J.P. Morgan and SEK offered STC a tailored financing solution, perfectly suited to STC’s payment obligations to Ericsson and at the most competitive terms thanks to STC’ strong credit profile.
The successful closing of this transaction demonstrates the relevance of ECA-financing solution to support STC’s investment and financing strategy and leads the way for future similar opportunities.
For a large Saudi company like STC, Shariah compliant was a mandatory feature of the financing in addition to securing optimal terms and conditions. We were able to combine these requirements and connect STC with Swedish export credit agencies to finance their project with Ericsson.
Alexandra Bonnet, Originator, Export Finance, BNP Paribas
Alexandra Bonnet, Originator, Export Finance, BNP Paribas, explained: “A large part of our deal structuring was spent listening to our client to make sure that any solution we proposed would be suited for them. For a large Saudi company like STC, Shariah compliant was a mandatory feature of the financing in addition to securing optimal terms and conditions. We were able to combine these requirements and connect STC with Swedish export credit agencies to finance their project with Ericsson.”
