BlackRock-led investors to refinance Aramco Pipelines stake

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• Plans for $3bn bonds issues
• Loan dates from 2021
• Tranches due in 2036 and 2042

Investors in Saudi Aramco’s gas pipeline network, led by BlackRock, the world’s largest asset manager, are planning to issue $3 billion in bonds to refinance a loan that backed their purchase of a stake in the network.  

The consortium of investors took a $13.4 billion bridge loan in 2021 to acquire a 49 percent stake in Aramco Gas Pipelines, as part of a $15.5 billion deal.

The 12 and 18-year amortised bonds, denominated in US dollars, will be issued subject to market conditions.

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In amortised bonds, the borrower makes periodic payments that include both interest and a portion of the bond’s principal amount.

Greensaif Pipelines Bidco, the debt issuer indirectly owned by the American company BlackRock and the Saudi asset manager Hassana Investment Company, will raise $1.4 billion from a tranche due in February 2036 and $1.6 billion from a tranche due in August 2042, according to reports.

Demand for the notes topped $9.2 billion, Reuters reported.

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Greensaif raised $4.5 billion in February last year by selling amortising bonds. The new issue aims to optimise the financial terms of the initial investment, diversify sources of financing, and reduce dependence on bridging loans.

BlackRock and its affiliates own 77 percent of Greensaif, while Hassana, the investment arm of Saudi Arabia’s General Organisation of Social Insurance, owns the rest.

Aramco sold a 49 percent stake in its oil pipeline network through a similar lease-and-leaseback agreement to a consortium led by the American EIG Global Energy Partners for $12.4 billion in 2021.

A sale-leaseback transaction enables a company to raise capital by selling an asset, then leasing that asset back from the purchaser.

These agreements generally meet the appetite of institutional investors, as they open investment opportunities in energy infrastructure.

In May BlackRock and the Public Investment Fund (PIF), Saudi Arabia’s sovereign fund, agreed to launch a new investment platform to accelerate the growth of the kingdom’s capital markets.

The BlackRock Riyadh Investment Management aims to invest in supporting infrastructure and investment research capabilities locally.

Aramco’s CEO, Amin Nasser, was appointed to BlackRock’s independent board of directors in July last year. Shareholders confirmed his election in May.