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Aramco returns to debt markets after shares sale

Aramco debt Dammam exhibition centre Reuters/Giuseppe Masci
Aramco plans to launch nearly 100 projects in the next three years to modernise existing oil and gas facilities
  • Oil giant is looking for at least $6bn
  • First return to debt market since 2021

Saudi Aramco returned to the debt market on Wednesday, offering bonds maturing in 10, 30 and 40 years and aiming to raise at least $6 billion.

The company is looking to capitalise on investors’ interest in its secondary share offering by raising more cash to finance its debt and a huge investment programme.

Final terms of the deal comprise $2 billion from each tranche.

The demand for the three tranches exceeded $31 billion. It reaped $11 billion for each of the first two tranches and over $9 billion for the 40-year tranche, according to Reuters.

It is the first time the Saudi oil giant has returned to debt markets since 2021, when it raised $6 billion from a three-tranche sukuk.

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

It aims to boost gas production by over 60 percent by 2030 from 2021 levels. Last month it awarded contracts exceeding $25 billion to expand its strategic gas programme.

The company also makes substantial international investments to build its global liquified natural gas portfolio.

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.

It also 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.

With its growing financing needs, Saudi Arabia was the biggest issuer of international debt among emerging economies after China.

It issued $12 billion of dollar-denominated bonds in January and $5 billion in sukuk, or Islamic bonds, in May.

Saudi Arabia has also raised $12.35 billion this week from selling Aramco shares, after exercising a so-called greenshoe option to place more stocks to answer investors’ demand. 

Merrill Lynch Kingdom of Saudi Arabia, which acted as a stabilising manager, was allowed to sell an extra 154.5 million shares on top of the 154.5 billion originally offered.

As Merrill Lynch exercised the over-allotment option in full, the offering will comprise approximately 0.70 percent of the company’s issued shares.

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