Saudi Armco announces multi-tranche bond deal for market comeback

Saudi Aramco on Monday announced that it had hired banks for a multi-tranche US dollar-denominated bond issuance as the world’s largest oil company is seeking monetary help due to lower oil prices. Goldman Sachs, Citi, HSBC, JP Morgan, Morgan Stanley and NCB Capital were hired to arrange investor beginning Monday before the planned transaction, Aramco said in a filing.

So far, the issuances from the region this year have already crossed 2019’s record as they again surpassed $100 billion. Gulf investors have shown zero signs of slowing this year’s attack of issues on international debt markets as they work tirelessly to cork finances hit by lower oil prices and the COVID-19 crisis.

Other banks in the deal include BNP Paribas, BOC International, BofA Securities, Credit Agricole, First Abu Dhabi Bank, Mizuho, MUFG, SMBC Nikko and Societe Generale, a document which was issued by one of the banks on the deal, mentioned.

The oil market giant, which debuted in the international debt markets last year after it raised $12 billion after receiving more than $100 billion in orders, did not provide details on the size of the latest proposed issuance. It planned a benchmark multi-tranche offering consisting of tranches for three, five, 10, 30 and/or 50 years, which are subject to market conditions, the document read. Benchmark bond’s rate is generally at least $500 million per tranche.

“The backdrop is supportive,” said a debt banker on the deal, stating a $1 billion Islamic bond issuance last week from Dubai Islamic Bank, which achieved very low yields.

Aramco needs cash to pay $37.5 billion in dividends for the second half of 2020 and to fund its $69.1 billion acquisition of 70 percent of Saudi Basic Industries (SABIC), paid by instalments until 2028. It has raised a $10 billion loan this year.