Page 10 - MEOG Week 23 2021

MEOG FINANCE & INVESTMENT MEOG

Aramco returns to

markets for $5bn bond

SAUDI ARABIA STATE-OWNED Saudi Aramco this week hired investors. These comprised Alinma Invest, Al
a group of banks to advise on and arrange its first Rajhi Capital, BNP Paribas, Citi, First Abu Dhabi
US dollar-denominated sukuk, with Reuters Bank, Goldman Sachs International, HSBC,
reporting that a target of $5bn has been set. JPMorgan, Morgan Stanley, NCB Capital, Riyad
According to the bond prospectus, funds Capital, SMBC Nikko and Standard Chartered.
raised will be used for general corporate Meanwhile, ADCB, Albilad Capital, AlJazira
purposes. Capital, Alistithmar Capital, ANB Invest, BOC
However, while financial pressure associated International, Credit Agricole, Dubai Islamic
with the company’s $75bn per year dividend Bank, Emirates NBD Capital, GIB Capital, KFH
commitment has eased along with the recent oil Capital, MUFG, Mizuho, NBK Capital, Saudi
price recovery, the funds are likely to be used in Fransi Capital and Societe Generale will all also
part to cover a portion of Aramco’s upcoming play a role in the sukuk.
quarterly $18.75bn payment. Reuters quoted a source close to proceedings
The company’s Q1 results highlighted the as saying that an Islamic bond issuance had been
improvements in the oil market, with Aram- chosen over a conventional bond because of the
co’s net profit up by $5bn compared to the same scarcity of dollar-denominated sukuks this year.
period a year earlier, largely on the back of an The bond will be the company’s third, follow-
$8.4 per barrel increase in the realised price ing a $12bn deal in 2019 and an $8bn transaction
of crude year on year. However, free cash flow late last year.
(FCF) came in just below the dividend level at Barring an unexpected reversal in fortunes,
$18.3bn. Aramco’s Q2 performance will show contin-
Both Reuters and Bloomberg quoted sources ued improvement, with Saudi Arabia having
and banking documents as saying that Aramco expanded oil production by 340,000 barrels per
would hold investor calls ahead of launching the day as it started unwinding the 1mn bpd volun-
sukuk in three-, five- and 10-year tranches, sub- tary cut it made in January to stabilise markets
ject to market conditions. amid concerns about economic recovery from
Aramco hired 13 banks to arrange calls with the coronavirus (COVID-19) pandemic.™

P10 www. NEWSBASE .com Week 23 09•June•2021