Saudi Aramco Raises $3 Billion via Sukuk Bonds
The largest oil firm in the world, Saudi Aramco (2222.SE), raised $3 billion from the sale of Islamic bonds, according to a term sheet released on Thursday. Investors were unconcerned by the Israeli raid on neighbouring Qatar this week.
According to the term sheet obtained by Reuters, Aramco priced $1.5 billion in five-year Islamic bonds, or sukuk, at a profit rate of 4.125% and $1.5 billion in 10-year sukuk at a profit rate of 4.625%.
The term sheet revealed that Aramco tightened the spreads to U.S. Treasuries on both tranches by 35 basis points from the initial price guide due to strong demand, indicating that investors had dismissed Tuesday’s attack on Qatar.
Saudi Aramco did not immediately respond to a request for comment from Reuters regarding the transaction.
Aramco’s debt sale comes after a spike in bond issuance from the Gulf region this month, including Saudi Arabia’s $5.5 billion sukuk sale, driven by strong investor demand and heavy inflows into bond funds.
A separate bank document seen by Reuters revealed that final order books for both tranches topped $16.85 billion. Demand had peaked at over $20 billion, according to fixed income news service IFR.
A day after Israel escalated its military action in the Middle East by attempting to kill Hamas political leaders through airstrikes on Qatar, it was also a test of investor appetite for regional deals.
According to Reuters last week, Aramco, whose majority shareholder is the Saudi government, could raise between $2 billion and $4 billion from the sale of sukuk amid lower oil prices.
The debt will be used for general corporate purposes, according to the term sheet, and the required active bookrunners on the transaction.Aramco has been looking for alternative ways to generate money.
It inked a $11 billion lease and leaseback deal with a group led by Global Infrastructure Partners (GIP), a division of BlackRock, last month for its Jafurah gas processing facilities.
According to a Reuters story on Wednesday, the consortium is negotiating to raise about $10 billion in debt to support the deal.
SOURCE: REUTERS
