By Yousef Saba and Scott Murdoch
DUBAI (Reuters) – Saudi Arabian oil giant Aramco pledged another $ 6 billion on Wednesday to help finance a large dividend as it returned to international debt markets with its first sale of US dollar-denominated sukuk, showed a document.
The debt issuance, which will help finance a commitment of dividends of 75,000 million dollars that will mostly go to the government, comprises tranches of three, five and 10 years, a document from one of the banks that signed the agreement showed and seen by Reuters.
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 on 10-year paper at 120 bps over UST.
The initial price guide was around 105 bps over UST for three-year bonds, around 125 bps over UST for five-year notes, and around 160 bps over UST for the 10-year tranche.
Spreads were adjusted after the deal attracted combined orders of more than $ 60 billion.
Last year, Aramco kept its promised $ 75 billion annual dividend to shareholders despite lower oil prices, and is expected to take on significant domestic investments in Saudi Arabia’s plans to transform the economy.
Fitch assigned Aramco’s sukuk issuance program an A1 rating with a negative outlook, in line with the negative outlook on Aramco’s existing ratings and following a change in Saudi Arabia’s sovereign outlook to negative in May last year.
“The company has shown a strong commitment to pay $ 75 billion in annual dividends, which in the opinion of Moody’s (NYSE 🙂 is not sustainable if oil prices fall and remain significantly below $ 60 / bbl.” Fitch said.
“The ties between Saudi Arabia and the company imply that any change in the Saudi government’s rating outlook would be reflected in Saudi Aramco Rating Outlook of (SE 🙂 “.
The company decided to issue Islamic bonds instead of 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 was expected to become a regular bond issuer after its initial issuance of $ 12 billion in 2019 was followed by an $ 8 billion five-part transaction in November of last year, also used to fund its dividend. .
A source had told Reuters that Aramco was expected to raise up to $ 5 billion from the deal, which had 29 active and passive bookmakers working on it.
Active bookmakers in the deal included Citi, HSBC, JPMorgan (NYSE :), NCB Capital and Standard Chartered (OTC 🙂 Bank. Passive book brokers included BOC International and Dubai Islamic Bank.
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