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Aramco closes first bond sale in three years, lining up USD 6 bn — USD 1 bn more than it had originally targeted. The state-owned oil giant has completed the sale of USD-denominated 10-year, 30-year and 40-year senior unsecured notes, it said in a press release. The three-part issuance, which saw it raise a total of USD 6 bn in proceeds, will be listed on the London Stock Exchange as part of Aramco’s global medium term note program.
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A strong comeback: The sale marks the oil giant’s return to the international debt market, ending a three-year break since it raised USD 6 bn in a three-tranche sukuk issuance back in 2021.
Strong investor appetite: The offering was more than 6x oversubscribed in comparison to the original target of a USD 5 bn offering, suggesting there was demand for north of USD 30 bn worth of bonds. Demand was primarily driven by “a diverse base of investment-grade focused institutional investors,” according to the press release.
REFRESHER- Orders for the three-tranche bond offering by investors topped USD 31.5 bn, luring in USD 11 bn for each of the 10-year tranche and the 30-year tranche, with the 40-year tranche drawing in over USD 9.5 bn in demand.
Yield + Maturity: The 10-year tranche will offer its holders an annual yield of 5.25%, that is at 105 basis points (bps) over US Treasuries. Meanwhile, the 30-year tranche carries a yield of 5.75% at a 145 bps premium, and the 40-year tranche a yield of 5.875% at a 155 bps premium.
What they said: “Our order book exceeded USD 33 bn at its peak, reflecting Aramco’s exceptional financial resilience and fortress balance sheet. Achieving a negative issue premium across all tranches is a testament to our unique credit proposition,” Aramco Executive Vice President for Finance and CFO Ziad Al-Murshed said.
ICYMI- The spreads narrowed from initial guidance of 140 bps over US Treasures for the 10-year tranche and 180 bps and 195 bps for the 30-year and 40-year tranches, reflecting strong investor appetite, according to IFR, Reuters reported earlier.
Where’s the money? Aramco will earmark the proceeds of the bonds for “general corporate purposes” and could include additional purposes in the final terms of the issuance, it said earlier. The proceeds could be used “to refinance existing borrowings and contribute to its investment program,” Bloomberg reported earlier.
IN CONTEXT- Saudi Arabia had sold over USD 33 bn worth of debt this year — topping China as the biggest issuer of international debt among emerging markets — to close its SAR 81 bn budget deficit from project spending. Recent debt sales include USD 5 bn worth of FCY-denominated sukuk with three-, six-, and 10-year tranches in May, and a USD 12 bn USD-denominated sovereign bond sale back in January.
ADVISORS- Citi, Goldman Sachs International, HSBC, JP Morgan, Morgan Stanley, and SNB Capital were active joint bookrunners. Passive joint bookrunners for the issuance were Abu Dhabi Commercial Bank, Anb capital, Bank of China, BofA Securities, BSF Capital, Emirates NBD Capital Limited, First Abu Dhabi Bank, GIB Capital, Mizuho, Mufg, Natixix, Riyad Capital, SMBC Nikko, and Standard Chartered Bank.
