World news – CA – Saudi Aramco plans debt market return with multi-tranche bond deal


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DUBAI (Reuters) – Saudi Aramco said on Monday it had hired banks for multiple segments. . s. Issuing dollar-denominated bonds as the world’s largest oil company seeks liquidity amid low oil prices.

The Gulf issuers have shown no indication of a slowdown in the series of issuances this year in the international debt markets as they work to bridge the financial conditions affected by weak oil prices and the Coronavirus crisis.. .

Releases from the region this year have so far surpassed the 2019 record, once again topping $ 100 billion.

Aramco said in the stock exchange file that Goldman Sachs, Citi, HSBC, JP Morgan, Morgan Stanley, and NCP Capital had been contracted to arrange investor calls that start on Monday prior to the planned deal.. .

Other banks participating in the deal include BNP Paribas, BOC International, BofA Securities, Credit Agricole, First Abu Dhabi Bank and Mizuho, ​​MUFG, SMBC Nikko, and Societe Generale, and a document issued by one of the banks regarding the deal showed.

The oil giant, which made its debut on the international debt markets last year raising $ 12 billion after receiving orders of more than $ 100 billion, has not detailed the size of the last proposed issuance.. .

The document said it has planned a modular multi-segment offering of three, five, 10, 30 and / or 50 years, depending on market conditions. . Standard bonds are generally at least $ 500 million per tranche.

“The background is supportive,” a debt banker said of the deal, citing a $ 1 billion Islamic bond issue last week by Dubai Islamic Bank, which brought record low returns. .

Aramco needs cash to pay $ 37. 5 billion in profits for the second half of 2020 and to fund $ 69. One billion acquisitions of 70% of the Saudi Basic Industries Corporation (SABIC), to be paid in installments until 2028. It raised a $ 10 billion loan this year.

“In a world looking for yield, there should be no shortage of demand. Hassanein Malik, Head of Equity Strategy at Tellimer, said that continued low oil prices and the threat posed by long-term cash generation should be reflected in prices.. .

Rating agency Fitch last week revised its forecast for Aramco to negative from stable, a day after similar action on Saudi Arabia, which holds a controlling stake in the oil giant. . Government finances are highly dependent on the hydrocarbon industry.

“This reflects the influence that the state exerts on the company through strategic direction, taxes and dividends, as well as the regulation of the level of production in line with OPEC’s commitments,” Fitch said.. .

The distinguished Aramco company. s. The dollar-denominated bonds due in 2029 traded at a price of 2. Refinitiv data showed that at 05% on Monday, the yield is slightly higher than Saudi government paper of similar maturity..

A bond prospect, seen by Reuters, details risks for investors, including the COVID-19 virus and Saudi government decisions on oil production and spare capacity.

The prospectus said: « The costs of Saudi Aramco’s compliance with such decisions may not increase revenues for Saudi Aramco, » indicating potential restrictions on its oil production.. .

Aramco reports 44 percent. Third-quarter net profit is down 6% this month as the pandemic continues to choke off demand and impact crude oil prices.

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Saudi Aramco, bonds, tranches, financing

World News – CA – Saudi Aramco plans to return to the debt market with a multi-segment bond deal