SAUDI Aramco is looking to raise at least US$3 billion from its first bond sale in three years, according to sources familiar with the plan.
The world’s biggest oil exporter is offering debt with 10-, 30- and 40-year maturities, according to a source with knowledge of the matter. Meetings with fixed income investors are expected to start on Tuesday (Jul 9), the source said.
The oil giant has hired banks including Citigroup, Goldman Sachs, HSBC Holdings, JPMorgan Chase, Morgan Stanley and SNB Capital to manage the sale, sources familiar with the matter said.
The final deal size could be larger depending on investor demand. A spokesperson for Aramco declined to comment.
The plan to issue debt comes weeks after the Saudi government offloaded an US$11.2 billion stake in Aramco. The firm will use funds to refinance existing borrowings and contribute to its investment programme.
Chief financial officer Ziad Al-Murshed said in February that the firm could look to sell debt with a duration of 15 to 50 years in 2024 as financial markets improve and the company looks to leverage its massive balance sheet.
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Aramco has embarked on a large investment plan to develop new gas resources – signing construction contracts worth US$25 billion for the development of its Jafurah project – as it looks to boost production.
It sold its first bonds in 2019, followed by 50-year debt in 2020 and issued dollar-denominated Islamic notes in 2021.
In May, Aramco maintained its US$31 billion quarterly dividend payout to the Saudi government and other investors despite lower profit. Its free cash flow – funds from operations minus capital expenditure – of US$22.8 billion in the period was less than the total payout.
The company will continue to pay what it can afford and will not need to issue debt to support the dividend, Al-Murshed said in February. The base dividend will be “sustainable and progressive”, meaning the company aims to increase it in coming years, he added. BLOOMBERG
