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Saudi Aramco Raises $6 Billion with Debut Sukuk

Saudi Aramco Raises $6 Billion with Debut Sukuk

Thursday, 10 June, 2021 - 04:45
The logo of Aramco is seen as security personnel walk before the start of a press conference by Aramco at the Plaza Conference Center in Dhahran, Saudi Arabia November 3, 2019. (Reuters)

Saudi Arabian oil giant Aramco locked in another $6 billion on Wednesday to help fund a large dividend as it returned to the international debt markets with its first US dollar-denominated sukuk sale, a document showed.


The debt issuance, which will help fund a $75 billion dividend commitment that will mostly go to the government, comprises tranches of three, five and 10 years, a document from one of the banks arranging the deal and seen by Reuters showed.


Aramco sold $1 billion in the three-year tranche at 65 basis points (bps) over US Treasuries (UST), $2 billion in the five-year portion at 85 bps over UST and $3 billion in 10-year paper at 120 bps over UST.


Initial price guidance was around 105 bps over UST for the three-year bonds, around 125 bps over UST for the five-year notes and around 160 bps over UST for the 10-year tranche.


The spreads were tightened after the deal attracted combined orders of more than $60 billion.


Aramco last year maintained its promised $75 billion annual dividend to shareholders despite lower oil prices, and is expected to shoulder significant domestic investments in Saudi Arabia's plans to transform the economy.


The company chose to issue Islamic bonds over conventional ones due to high demand for the instrument as a result of the low number of dollar sukuk sales in the Gulf this year, a source told Reuters on Monday.


Aramco has been widely expected to become a regular bond issuer after its debut $12 billion issuance in 2019 was followed by an $8 billion, five-part transaction in November last year, also used to fund its dividend.


A source had told Reuters that Aramco was expected to raise up to $5 billion with the deal, which had 29 active and passive bookrunners working on it.


Active bookrunners on the deal included Citi, HSBC, JPMorgan, NCB Capital and Standard Chartered Bank. Passive bookrunners included BOC International and Dubai Islamic Bank.


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