SABIC launched a $1 billion five-year bond on Tuesday, with pricing tighter than guidance released earlier in the day.

SABIC Capital, a unit of the largest listed company in the Gulf, had planned to issue a bond earlier in the year but held off due to unfavorable market conditions at the time.

"It's a company that the markets like ... the problem is that markets regard the last few deals as having priced too tight, which is clearly what the issuers want," said one market source. "It will be interesting to see how the deal performs in secondary (trading)."

Pricing tightened from 175 basis points over midswaps on Monday to 165 basis points on Tuesday.

"We should see some selling coming on first up ... before buying comes in," said another market source.

The petrochemicals giant mandated HSBC, JPMorgan and Royal Bank of Scotland as bookrunners for the bond issue.

Speaking to Al Arabiya television, SABIC Chief Executive Mohamed al-Mady confirmed the amount and the pricing of the bond, and said its proceeds would go towards refinancing existing debt. "We consider it (the pricing) good," he said.

Asked if more issues were in the pipeline, Mady said: "Definitely ... in the future, there will be new issues and borrowing both inside and outside the kingdom."

He did not give details.

SABIC shares rose 0.5% to a new five-month high on Tuesday and analysts were bullish about prospects for Saudi petrochemicals as expected U.S. quantitative easing measures - essentially printing more dollars - boost materials stocks globally.

The Gulf Arab region has seen a stream of primary issues hitting the international bond markets in recent weeks as investor demand and more favorable market conditions propel regional sovereign and corporate entities to sell bonds.

However, many recent bond issues from the region have tightened pricing on launch due to robust demand and narrowing spreads, pushing yields lower.