EM CEEMEA CREDIT: MAADEN: mandate for USD 5Y & 10Y Sukuks

Saudi Arabian Mining (Ma’aden; Baa1/-/BBB+)

Mandate: USD 5Y and 10Y benchmark Sukuk

• Ma’aden has mandated for USD benchmark Sukuk deal, indicating 5Y and 10Y tenors. Ma’aden does not have any hard-ccy outstanding public debt in bond format. We see FV estimates in the region of 5Y @ z+138bp or T+110bp and 10Y @ z+170bp or T+125bp (see chart below).
• For comparables within Saudi Arabia, we look at better rated PIFKSA (Aa3/-/A+) charting Sukuks PIFKSA 5.171 Mar31 @ z+123bp and PIFKSA 6.25 Oct33 @ z+128bp, as well as KSA (Aa3/Apos/A+) charting Sukuks KSA 5.25 Jun30 @ z+111bp and KSA 5.25 Jun34 @ z+123bp. We see the Sukuk format as key in our considerations around fair value estimates.
• As industry peers across geographies, we look at Morocco’s lower-rated, phosphate champion OCPMR (Baa3/BB+/BB+) charting OCPMR 6.75 May34 @ z+242bp and OCPR 3.75 Jun31 @ z+223bp and Chile’s similarly rated SQM (Baa1/BBB+/-) charting SQM 6.5Nov33 @ z+187bp and SQM 5.5 Sep34 @ z+208bp. OCPMR curve charts some 40bp in z-spread on top of MOROC sovereign curve.
• Ma’aden is a Saudi, listed, state owned multi-commodity mining and metals company, with headquarters in Riyadh, Kingdom of Saudi Arabia. Ownership structure benefits from Public Investment Fund of Kingdom of Saudi Arabia (PIFKSA) owning over 65% majority stake.
• The Co. plays a strategic role in delivering Saudi Arabia’s Vision 2030. It states being active in over 30 countries, operating 17 mines and sites covering three main segments: phosphate, aluminium, and rare metals (gold, copper and new minerals).
• The main contributor to sales remains Phosphates, accounting for approx. 64% of 9M24 EBITDA (from approx. 40% in FY20) and 55% of sales from 47% in FY20 (all figures indicative).
• Aluminium’s 9M24 EBITDA segment contribution was approx. 24% @ SAR2.16bn (FY20 EBITDA @ SAR 2.23bn). The Co. refers to an ambitious, acquisitive plan, targeting a 10x EBITDA growth over 2020-40 period. This supports the Co.’s diversification effort, a key pillar of its Vision 2040 strategy programme.
• On November 7, 2024, Ma’aden  posted 3Q24 results with 9M24 showing revenue growth +6% YoY @ SAR22.58bn, EBITDA +45% YoY @ SAR8.84bn and Net Profit @ SAR2.98bn. Op Cash Flow was +10% YoY @ SAR7.08bn. Ma’aden announced a “capital allocation strategy geared for expansion” (Source: Co. 9M24 outlook). Leverage declined with 9M24 NetDebt/EBITDA @ 1.9x vs 2.3x FY23, guidance for FY24 is in 2-3x range.