Aramco Confirms $6B Bond Issuance

Saudi Arabian Oil Co. (Aramco) recently completed a three-tranche bond offering, raising a combined $6 billion in United States dollar-denominated senior unsecured notes.

The debt sale consists of $2 billion maturing 2034 with a 5.25 percent interest, $2 billion to be repaid 2054 with a 5.75 percent interest and $2 billion due 2064 with a 5.875 percent interest, the state-owned oil giant confirmed in a statement. Bloomberg reported the development a week earlier citing an unnamed person familiar with the matter.

The offering, under the company’s Global Medium Term Note Program, was oversubscribed, with the initial target at $5 billion, Aramco said. The program, announced April 1, 2019, is listed on the London Stock Exchange.

“The transaction received strong demand from a diverse base of investment-grade focused institutional investors”, Aramco said. “All three tranches were favorably priced with a negative new issue premium, reflecting Aramco’s strong credit profile”.

Chief financial officer Ziad T. Al-Murshed added, “We are pleased with the strong interest and level of engagement from investors globally, both existing and new”.

“Our order book exceeded $33 billion at its peak, reflecting Aramco’s exceptional financial resilience and fortress balance sheet”, Al-Murshed added.

After announcing the finalization of the offering, Aramco opened the week higher, at SAR 28.5 ($7.6) on Sunday, the first day of trading on the Saudi stock exchange.

Aramco’s new borrowings come as the kingdom expects budget deficits to continue, reaching SAR 109 billion ($29.6 billion) in 2026, according to Saudi Arabia’s 2024 budget statement.

Aramco sees capital investments growing until the middle of the decade from an expected $48 billion this year. After that, however, Aramco projects capex falling by about $40 billion in the few years to 2028 due to the government’s order that it keep maximum oil output at 12 million barrels per day, according to the company’s financial report for 2023 released March 20, 2024.

Aramco first issued international bonds 2019, a few months before making its initial public offering the same year. It raised $12 billion from the debut offering April 2019 under its Global Medium Term Note Program.

In November 2020 Aramco issued dollar-denominated notes with $7.5 billion in total maturities in 2025, 2030, 2050 and 2070, according to its Bond Information webpage.

In June 2021 it said it had raised $6 billion from the sale of dollar-denominated Islamic bonds to institutional investors. Of the offering under Aramco’s International Sukuk Program, $1 billion was to mature 2024 carrying a profit rate of 0.946 percent, $2 billion was due 2026 with a profit rate of 1.602 percent and $3 billion was due 2031 with a profit rate of 2.694 percent.

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