The Saudi petrochemical industry is home to 22 companies, all located in the industrial cities of Yanbu and Juabail. The country's petrochemical production accounts for almost 10% of global production and is expected to exceed 16% by 2015. Companies such as SABIC report profits of more than 20 billion riyals, making the sector a key financial sector for the Saudi economy. The average growth of Saudi industry is 58% over the last 5 years. This growth results from an increase in demand for petrochemical products. However, this increase in demand led to new investments and projects that expanded existing factories, built new factories and introduced new products to the market. These efforts have financial elements of risk assessment and projects and investments. Financially, for a company like SABIC, its financial risk profile is modest. Indeed, its portfolio is supported by companies shy of its free operating cash flow before dividends. FOCF was significantly increased in 2012 and 2011 to nearly 36 billion riyals, now that the company's massive multi-tier capital expenditures have declined. Additionally, managing the company's liquidity is convenient. It has substantial cash balances, which management intends to use to cover various debt maturities in the coming years, and which remain flexible in the event a mid-sized acquisition opportunity arises. The company's adjusted funds from operations to debt ratio in 2013- In 2014, it is expected to remain stable between 70 and 100%, even when taking into account the possibility that part of the huge cash balances of the company can be used for purchases of medium-sized companies. The operating funds to debt ratio, as of the end of May...... middle of paper ...... e just a series of constituent caplets or options for each time the cap agreement is concluded. For businesses, caplets are designed to provide coverage against increases in benchmark interest rates for a defined period. • Embedded Options The investor could experiment with derivative investment management techniques through embedded options. If the investor purchased bonds with called provisions, the issuer of the callable bond guarantees that in the event of a drop in the interest rate, it can call the bond and reissue a new bond based on the new rate (lower coupon). Interest rate risk management techniques apply to different investment scenarios and products. However, regardless of any of these interest rate risk alternatives, the investor forgoes either the profit made if hedging was avoided or the premiums paid for the option..