Saudi Aramco (2223.SE) has initiated a three-part bond sale, potentially raising at least $3 billion, as reported by news service IFR and a source familiar with the matter told Reuters.
This move follows Saudi Arabia’s substantial $12.35 billion gain from a secondary share sale in Aramco, according to a document.
This bond sale marks Aramco’s return to the debt markets after a three-year break, capitalizing on favorable market conditions.
Aramco, a significant revenue source for Saudi Arabia, is crucial for funding new industries and reducing the country’s dependence on oil as part of the Vision 2030 plan.
The company plans to distribute $124.3 billion in dividends for 2024, with the majority going to the government, which owns about 81.5% of Aramco.
Aramco’s latest bond sale aligns it with top firms and governments in the Gulf region, which are actively entering markets this year to finance investments.
According to IFR, the proceeds will be used for general corporate purposes.
The three-part bond sale includes bonds maturing in 10, 30, and 40 years, with initial guidance set around 140 basis points (bps) over U.S. Treasuries (UST) for the 10-year bond, 180 bps over UST for the 30-year, and 195 bps for the 40-year bond.
In the first half of the year, state-owned companies in emerging markets issued $21.4 billion in dollar-denominated bonds, a 22% increase from the previous year, based on a report by investment firm Tellimer.
Saudi state-owned companies led with 23% of the total issuance value, while the government issued $12 billion in dollar-denominated bonds in January and $5 billion in sukuk, or Islamic bonds, in May.
Last month, Aramco secured $25 billion worth of contracts for its gas expansion plans.
Additionally, the company announced it would purchase 10% of Renault (RENA.PA) and Geely’s (0175.HK) thermal engines joint venture, Horse Powertrain, and entered a non-binding agreement with U.S. energy firm Sempra to buy liquefied natural gas.
Aramco last accessed global debt markets in 2021, raising $6 billion through a three-tranche sukuk. In February, it indicated plans to issue bonds this year.
The 40-year tranche would be its second-longest dated bond, following $2.25 billion of notes due in November 2070.