[DUBAI] Saudi Aramco, the world’s biggest oil company, raised US$3 billion from a sale of Islamic bonds, a term sheet showed on Thursday (Sep 11), as investors appeared unperturbed by an Israeli attack on neighbouring Qatar this week.
Aramco priced US$1.5 billion in five-year Islamic bonds, or sukuk, at a profit rate of 4.125 per cent and US$1.5 billion in 10-year sukuk at a profit rate of 4.625 per cent, the term sheet seen by Reuters showed.
Solid demand helped Aramco tighten both tranches’ spreads to US Treasuries by 35 basis points from initial price guidance, the term sheet showed, signalling investors shrugged off Tuesday’s attack on Qatar.
Final order books for both tranches topped US$16.85 billion, a separate bank document seen by Reuters showed. Demand had peaked at over US$20 billion, according to fixed income news service IFR.
“I don’t see much reaction (from the attack on Qatar),” a Saudi-based investment banker said as the sale kicked off, requesting not to be named.
Saudi Aramco did not immediately respond to a request for comment from Reuters on the transaction.
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Aramco’s debt sale follows a surge in bond issuance from the Gulf region this month, including Saudi Arabia’s US$5.5 billion sukuk sale, driven by strong investor demand and heavy inflows into bond funds.
But it was also a test of investor appetite for regional deals a day after Israel attempted to kill the political leaders of Hamas with airstrikes on Qatar, escalating its military action in the Middle East.
Reuters reported last week that Aramco, in which the Saudi government is the majority shareholder, could raise between US$2 billion and US$4 billion from the sukuk sale amid weaker oil prices. The debt will be used for general corporate purposes, the term sheet said.
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Al Rajhi Capital Company, Citi, Dubai Islamic Bank, First Abu Dhabi Bank, Goldman Sachs International, HSBC, JPMorgan, KFH Capital, and Standard Chartered Bank are mandated active bookrunners on the transaction.
Aramco has been seeking other avenues to raise funds. Last month, it signed an US$11 billion lease and leaseback agreement involving its Jafurah gas processing facilities with a consortium led by Global Infrastructure Partners (GIP), part of BlackRock. The consortium is in talks to raise around US$10 billion in debt to back the deal, Reuters reported on Wednesday. REUTERS
