Fitch Rates Saudi Electricity Global Sukuk Company's Trust Certificates 'AA-'.

Summary: Fitch Ratings assigned SEGC 2.665% USD500m trust certificates maturing in 2017 and 4.211% USD1.250bn trust certificates maturing in 2022 final 'AA-' ratings. The ratings are aligned with Saudi Electricity Company's (SEC) 'AA-' Long-term Issuer Default Rating (IDR)

Fitch Ratings has assigned Saudi Electricity Global Sukuk Company's (SEGC)2.665% USD500m trust certificates maturing in 2017 and 4.211% USD1.250bn trust certificates maturing in 2022 final 'AA-' ratings. The ratings are aligned with Saudi Electricity Company's (SEC) 'AA-' Long-term Issuer Default Rating (IDR), its senior unsecured debt rating, and the 2010, 2009 and 2007 series of domestically issued Sukuk ratings.

Certificate proceeds will be used to purchase a portfolio of generating assets from SEC, SEGC's parent. As part of the transaction, SEGC in its capacity as lesser under the Ijara agreements, will lease these assets back to SEC. Rent paid by SEC in respect to these assets will be used to fund the periodic distributions due under the certificates. On the scheduled dissolution date, the trustee may exercise its rights under the purchase undertaking and require SEC to purchase all of its rights, title, interests, benefits and other entitlements in and to the assets.

The trust certificates are issued on an unsecured and unsubordinated basis. Among other standard conditions, the trust certificates benefit from a negative pledge, a change of control, and a cross-default provision. Proceeds of the issuance will be used for general corporate purposes. English law governs the certificates.

SEC is the incumbent electric utility in the Kingdom of Saudi Arabia (KSA; 'AA-'/Stable/'F1+'). Its ratings are aligned with the sovereign in accordance with Fitch's parent and subsidiary methodology and reflect state financial support that historically has been very strong. SEC is a monopolistic, low-risk, and regulated electricity generation, transmission, and distribution business. SEC has a dominant presence in the electricity generation segment within the KSA and supports the credit profile. However, rating concerns include execution risk related to SEC's large capex programme, low capacity utilisation rates in the electricity generation segment of the business, high electricity transmission losses, limited visibility in the current cost structure, and lack of clarity around the process to settle future fuel costs with Saudi Aramco.

The Stable Outlook on the Long-term IDR mirrors that on the KSA. SEC's liquidity is strong. At the end of 2011, it had approximately SAR25.9bn in total liquidity, including SAR7.3bn in cash, with most of the remainder comprising headroom under existing government and commercial facilities. This compares well with around SAR8.1bn in debt maturities in 2012, including SAR5bn in Sukuk bonds.

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