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Saudi Aramco to raise funds via Islamic bonds

By Pramod Kumar
Person, Worker, Clothing Aramco
A worker at Aramco's oil refinery. The Islamic bond offering will be open to institutional investors, with a minimum subscription of $200,000

Saudi Aramco has launched US dollar-denominated sukuk (Islamic bonds) as part of its fund-raising strategy.

The net proceeds will be used for general corporate purposes, the company said in a statement to the Saudi stock exchange on Tuesday.

The offering will be open to institutional investors, with a minimum subscription of $200,000. The total proceeds expected from the issuance were not revealed.

Al Rajhi Capital, Citi, Dubai Islamic Bank, First Abu Dhabi Bank, Goldman Sachs International, HSBC, JP Morgan, KFH Capital and Standard Chartered Bank have been named as active joint bookrunners.

Abu Dhabi Commercial Bank, Albilad Capital, Alinma Investment, BOC International, Emirates NBD Capital, Mizuho, MUFG, Natixis, Sharjah Islamic Bank and SMBC Nikko are passive joint bookrunners.

In July, Saudi Aramco returned to the debt market, offering bonds maturing in 10, 30 and 40 years and raising $6 billion.

The world’s largest oil producer reported a 9 percent decline in net profit to SAR212 billion ($56 billion) in the first half of 2024 as a result of lower crude oil volumes sold, weakening refining margins and lower finance income.

The company plans to launch nearly 100 projects in the next three years to modernise existing oil and gas facilities and increase output and treatment capacities.

Its capital investments are expected to be between $48 billion and $58 billion in 2024, against $49.7 billion last year. The company plans to increase spending until around the middle of this decade.

Moreover, Aramco needs cash to pay its massive dividend of more than $124 billion a year, the world’s largest.

The majority of the payout goes to the Saudi government, which directly owns about 81.5 percent of Aramco, and helps finance Saudi Arabia’s ambitious 2030 diversification plan.

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