Saudi Aramco Completes $6 Billion Bond Issuance
After a three-year hiatus, energy giant Saudi Aramco has successfully completed the issuance of a $6 billion US dollar-denominated international bond, marking its return to the debt market.
Successful Offering on the London Stock Exchange
The offerings, which began on July 9 under the firm’s Global Medium Term Note program, will be traded on the London Stock Exchange. This marks a significant milestone for the state oil firm.
Previous Debt Market Activity
The last time Aramco tapped the debt market was in 2021 when it raised $6 billion from a three-tranche sukuk, also known as an Islamic bond. This latest issuance reflects the company’s commitment to leveraging debt markets.
Global Interest in Debt Markets
Governments and companies in the Middle East have been eager to leverage debt markets this year amidst declining global interest rates. Saudi Arabia issued $12 billion in dollar-denominated bonds in January, further highlighting this trend.
Positive Investor Response
Aramco’s Executive Vice President of Finance and Chief Financial Officer, Ziad T. Al-Murshed, expressed satisfaction with the strong interest and engagement from investors globally. The order book exceeded $33 billion at its peak, demonstrating Aramco’s financial resilience.
Future Plans for Long-Term Bonds
Al-Murshed hinted at the possibility of issuing longer-term bonds of up to 50 years in 2024 as market conditions improve. The company remains focused on maintaining a strong investment-grade credit rating across business cycles.
Oversubscribed Offering
The latest offering was more than six times oversubscribed, based on the initial targeted size of $5 billion. Aramco received strong demand from a diverse base of investment-grade-focused institutional investors, showcasing its strong credit profile.
Compliance and Redemption Options
The bonds will be issued in accordance with Rule 144A/Reg S offering requirements under the US Securities Act of 1933. The issuance also complies with stabilization rules of the Financial Conduct Authority and the International Capital Market Association. Various redemption options are available at maturity, in case of default, or for tax reasons.
Recent Public Offering Success
In June, Aramco sold over $10 billion worth of shares in its second public offering, further solidifying its position in the market. The company continues to make strategic moves to strengthen its financial position.