Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Aramco markets five-tranche bonds, seeking cash amid cheap oil

Published 11/17/2020, 12:56 AM
Updated 11/17/2020, 02:20 AM
© Reuters. FILE PHOTO: An employee in a branded helmet is pictured at Saudi Aramco oil facility in Abqaiq
2222
-

By Yousef Saba

DUBAI (Reuters) - Saudi Aramco (SE:2222) began marketing a five-tranche U.S. dollar-denominated bond sale on Tuesday, as the world's largest oil producer seeks cash after low oil prices dented its finances.

The move is part of an onslaught on international debt markets by Gulf issuers seeking to plug finances hit by the pandemic and weak oil prices, which has pushed regional issuance past last year's record to surpass $100 billion again.

Aramco needs the money to pay dividends of $37.5 billion for the second half of 2020 and fund its $69.1 billion purchase of 70% of Saudi Basic Industries (SABIC) (SE:2010).

It raised a loan of $10 billion this year, to be paid by installments until 2028, to back that acquisition.

Aramco gave initial price guidance of around 140 basis points (bps) over U.S. Treasuries (UST) for a three-year tranche, around 155 bps over UST for five-year bonds, around 175 bps over UST for 10-year notes, around 205 bps over UST for a 30-year tranche and around 230 bps over UST for 50-year bonds, the document showed.

There has been no official indication of size but Aramco's second foray into the international debt markets is expected to be sizeable, after raising $12 billion in its debut bond issuance last year.

"An issuer like this doesn't usually print tranches smaller than $1.5 billion or thereabouts," a banker on the deal said.

Last year, Aramco priced inside the sovereign of Saudi Arabia's curve, but financial sources expect its new bonds to be around 10 bps wider, suggesting investors see a slightly higher risk profile after this year's drop in oil prices.

Citi (N:C), Goldman Sachs (N:GS), HSBC (L:HSBA), JPMorgan (N:JPM), Morgan Stanley (N:MS) and NCB Capital (SE:1180) were hired as active book runners, a document issued by one of the banks on the deal showed.

© Reuters. FILE PHOTO: An employee in a branded helmet is pictured at Saudi Aramco oil facility in Abqaiq

Other banks involved in the deal include BNP Paribas (PA:BNPP), BOC International (SS:601696), BofA Securities (N:BAC), Credit Agricole (PA:CAGR), First Abu Dhabi Bank (AD:FAB), Mizuho (T:8411), MUFG (T:8306), SMBC Nikko (T:8316) and Societe Generale (PA:SOGN), the document showed.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.