Saudi Aramco is seeking to raise a minimum of $3 billion through its first bond issuance in three years.
Saudi Aramco is considering issuing its first bond in three
years, with the intention of raising a minimum of $3 billion, as disclosed by
individuals with knowledge of the plan.
The world's leading oil exporter is offering debt with 10-,
30- and 40-year maturities. Meetings with fixed income investors are scheduled
to commence on Tuesday.
The esteemed oil corporation has retained the services of
several prestigious banking institutions, including Citigroup Inc., Goldman
Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Morgan Stanley,
and SNB Capital, to facilitate the management of a significant sale. This
information has been shared by individuals who possess knowledge of the matter.
The final deal size may potentially increase subject to
investor demand. An Aramco representative chose not to comment.
The debt issuance plan follows the recent divestment of an
$11.2 billion stake in Aramco by the Saudi government. The proceeds from the
debt issuance will be utilized for refinancing existing borrowings and
contributing to the company’s investment program.
Our Chief Financial Officer, Ziad Al-Murshed, mentioned in
February that the company might consider issuing debt instruments with extended
durations ranging from 15 to 50 years in 2024. This strategic move aligns with
the anticipated improvement in financial markets and our intention to
capitalize on our robust balance sheet.
Aramco has initiated a substantial investment strategy to
enhance its natural gas resources. The company has committed to significant
construction contracts valued at $25 billion for the development of the Jafurah
project, aiming to augment its production capabilities.
The company commenced its bond issuance in 2019, followed by
the issuance of 50-year debt in 2020. Furthermore, it diversified its funding
sources by issuing dollar-denominated Islamic notes in 2021.
In May, Aramco sustained its quarterly dividend payout of
$31 billion to the Saudi government and other investors, despite experiencing a
decline in profits. The company's free cash flow, calculated as funds from
operations minus capital expenditure, amounted to $22.8 billion during the
period, falling short of the total dividend payout.
The organization will maintain Its”current dividend payments
within its financial capabilities and will not require additional debt issuance
for dividend support, as confirmed by Al-Murshed in February. The base dividend
will be characterized by sustainability and a progressive nature, indicating
the company’s intention to increase it in the upcoming years.