The Board of Directors of Saudi International Petrochemical Company (Sipchem) [2310.SE] has approved, on 27 March, the issuance of sharia-compliant Sukuk. According to the release on Tadawul, The CEO of Sipchem, Eng. Ahmed Al-Ohali, stated that the company is seeking to diversify its funding sources and explore opportunities to secure debt instruments to fund activities and projects, while supporting the best interest of the company and its shareholders. We view this positively as one of our main concerns for Sipchem this year was the large amount of debt due in the coming 12 months (STD: SAR300 million, CPLD: SAR711 million, Sukuk due this year: SAR1,800 million), which we expected would constrain the company’s liquidity significantly. The Sukuk issuance remains in the very early stages, and no details are yet available on potential size or pricing, but we expect the cost of debt is likely to be higher than the company’s previous Sukuk (SAIBOR + 1.75%), given the higher risks this time around in the current low oil price environment. (Tadawul, Yousef Husseini)   SIPCHEM: SAR13.80 as of 27 March 2016, Rating: Neutral, FV: SAR14.00 per share, MCap: USD1,349 million, SIPCHEM AB / 2310.SE