Saudi Aramco receives $8b with jumbo five-part bond deal

The Saudi Aramco logo is pictured at the company's oil facility in Saudi Arabia, REUTERS/Maxim Shemetov

Saudi Aramco was set to raise $8 billion from a fivepart bond deal on Tuesday as the world’s largest oil producer seeks cash after low oil prices dented its finances.

It received $48.1 billion in orders for the debt sale, less than half what it drew for its debut bond sale last year, when it raised $12 billion, a document issued by one of the banks leading the deal showed.

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.

Aramco, which reported a 44.6% slump in third-quarter profit, 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).

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

Aramco sold $500 million in three-year bonds at 110 basis points over U.S. Treasuries (UST), $1 billion in five-year bonds at 125 bps over UST, $2 billion in 10-year notes at 145 bps over UST, $2.25 billion in 30-year bonds at 3.3% and $2.25 billion in a 50-year tranche at 3.55%, the document showed.

“I think the shorter-end is offering a bit more value than the longer-dated bonds to where the existing bonds are trading,” said Max Wolman, senior portfolio manager at Aberdeen Asset Management.

Aramco tightened the spreads on the tranches with maturities of three, five and 10 years by 30 bps from where it began marketing them earlier on Tuesday. The spreads on the 30- and 50-year tranches were tightened by around 40 bps.

Last year, Aramco priced its debut bonds inside the Saudi government’s debt curve, but this bond sale was wider.

The 50-year tranche is the longest-dated international debt issued by Saudi Arabia. In April, it issued a 40-year bond tranche – at the time the longest-dated dollar issuance by a Gulf borrower, only to be overtaken by a 50-year tranche by Abu Dhabi in August.

Citi, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, NCB Capital were hired as active book runners.

Other banks involved in the deal include BNP Paribas, BOC International, BofA Securities, Credit Agricole, First Abu Dhabi Bank, Mizuho, MUFG, SMBC Nikko and Societe Generale.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.