Aramco Returns to Debt Market After 3-Year Hiatus, Joining Gulf Peers in Fundraising Spree
Saudi Arabia's state oil giant Aramco (TADAWUL:) has made a comeback to the debt market, tapping banks to sell bonds with maturities of 10, 30, and 40 years. The company is expected to raise a minimum of $3 billion across the three tranches, taking advantage of favorable market conditions before the summer lull.
Gulf companies and governments have been active in debt markets this year, with Saudi Arabia issuing $12 billion in dollar-denominated bonds in January and $5 billion in sukuk in May. Aramco last accessed global debt markets in 2021 and had hinted at a bond issuance this year.
The company's aggressive acquisition strategy is highlighted by recent announcements of contracts worth $25 billion for its gas expansion plans, investments in Renault (EPA:) and Geely's Horse Powertrain, and a deal with U.S. energy firm Sempra. Analysts believe Aramco's bond sale indicates a continued pursuit of acquisitions.
Aramco's dividends, a significant portion of which flow to the Saudi government and the Public Investment Fund, are crucial for the kingdom's economic diversification efforts under "Vision 2030". The government recently raised $11.2 billion by selling a stake in Aramco, while PIF has raised nearly $8 billion through debt sales.
The three-part bond sale is being managed by top global banks, with investor calls scheduled for Tuesday. The issuance includes a 40-year tranche, making it one of Aramco's longest-dated bonds.
In summary, Aramco's return to the debt market signals its commitment to growth through acquisitions, while also supporting Saudi Arabia's economic diversification goals. The bond sale provides an opportunity for investors to participate in the company's future endeavors and the kingdom's transformation away from oil dependency.