Saudi Aramco returns to debt market with three-tranche dollar bond sale

Saudi oil giant Aramco made its return to the debt market on Tuesday after a three-year hiatus, mandating banks for bonds maturing in 10, 30 and 40 years, a document from one of the banks on the deal showed.

The banks will arrange investor calls on Tuesday for the potential sale of benchmark-sized notes, according to the document, which did not disclose the size of the issuance.

Aramco is likely to raise at least $3 billion across the three tranches, a source with knowledge of the matter said.

The company did not immediately return a request for comment.

Gulf companies and governments have rushed to tap debt markets since the start of the year to take advantage of favourable market conditions, with oil-rich Saudi Arabia issuing $12 billion of dollar-denominated bonds in January.

Aramco, which last tapped global debt markets in 2021 when it raised $6 billion from three-tranche sukuk, or Islamic bonds, flagged in February it was likely to issue bonds this year.

The Saudi government also raised $11.2 billion from a 0.64% stake sale in Aramco last month, which could boost the country’s funding and its aim of shifting the economy away from oil under a plan called “Vision 2030”.

Aramco maintained its $31 billion dividends despite its first-quarter profit dropping 14%. It expects to declare $124.3 billion in payouts for 2024, the majority of which goes to the Saudi government.

A portion will also go to the Public Investment Fund, the kingdom’s sovereign wealth fund steering Vision 2030. In May, PIF got an 8% stake in Aramco from the government, doubling its holding.

Aramco, one of the world’s most profitable companies, has long been a cash cow for the Saudi state and has fuelled decades of prosperity.

Citi, Goldman Sachs International, HSBC, JPMorgan Chase, Morgan Stanley and SNB Capital have been appointed as joint active bookrunners for the three-part bond sale.

Abu Dhabi Commercial Bank, BofA Securities, the Bank of China, Emirates NBD, First Abu Dhabi Bank, GIB Capital and Mizuho are among the bank that are acting as joint passive bookrunners. – Reuters