DUBAI: Saudi Aramco has begun the process of issuing a multibillion-dollar tranche of sukuk (Islamic bonds) on international capital markets.
The company told the Saudi Tadawul that it had selected a group of regional and global financial institutions to organize a series of meetings with investors to market the bonds. A group of 13 banks are involved in the process, including some of the biggest names in global finance.
The Tadawul filing said that the proceeds from the issuance of the bonds — in the form of trust certificates — “will be used by Saudi Aramco for general corporate purposes or for any other purpose specified in the final terms for a series of trust certificates.”
The offer price, rate of return and maturity of the bonds will be determined by market conditions decided by the conversions with investors.
Some reports said that Aramco would look to raise $5 billion from the issue, but the company declined to comment on the exact size or other terms of the issue.
It is the first time Aramco has looked to raise capital on international markets in sukuk form, and reflects international appetite for Islamic bonds.
Analysts expect that some of the issue could be used to help pay the group’s promised dividend, amounting to $75 billion, pledged in the 2019 initial public offering.
The lenders listed among those mandated during a series of meetings on Monday included Alinma Invest, Al Rajhi Capital, BNP Paribas, Citi, First Abu Dhabi Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, NCB Capital, Riyad Capital, SMBC Nikko and Standard Chartered Bank.
It may offer three tranches of notes due in three, five and 10 years, Bloomberg reported on Monday, citing a person familiar with the matter.
Saudi Aramco raised $8 billion in November from another non-Shariah-compliant debt sale. That followed a $12 billion sale a year earlier.
In March, Aramco announced the highest profit of any oil company in the world despite what chief executive Amin Nasser called an “unprecedented and difficult” year.
The company made $49 billion in 2020, when oil prices fluctuated more than at any time for decades, and demand plummeted in the pandemic recession. Free cash flow stood at $49 billion in 2020.
Aramco is one of several major Saudi companies expected to take part in the “Shareek” initiative to direct investment funds into the Kingdom’s multitrillion-dollar strategy to diversify the economy away from oil dependency.
Oil prices have recovered significantly since the depths of last year, with Brent crude trading above $71 per barrel on Monday.