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Aramco starts issuing US dollar-denominated bonds

9 July 2024

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Saudi Aramco has started issuing US dollar-denominated international bonds under its global medium-term note programme.

In a filing with the Saudi Stock Exchange (Tadawul) on 9 July, Aramco announced that the bonds have a minimum subscription of $200,000, with the offering price and value determined based on market conditions.

The offering began on 9 July and is set to conclude on 17 July. 

The new bond issuance exercise marks the Saudi energy giant’s return to the debt market after a three-year gap. The last time Aramco tapped the global debt markets was in 2021, raising $6bn from a three-tranche sukuk (Islamic bond).

Aramco stated in its Tadawul filing that its US dollar-denominated bonds are direct, general, unconditional and unsecured obligations of the company. 

These bonds target institutional investors, specifically qualified investors in jurisdictions where the offering complies with local regulations.

Citi, Goldman Sachs International and HSBC are managing the bond issuance. JP Morgan, Morgan Stanley and SNB Capital are also participating as active joint bookrunners. 

Additional joint bookrunners for the exercise are Abu Dhabi Commercial Bank, ANB Capital, Bank of China, BofA Securities, BSF Capital, Emirates NBD Capital, First Abu Dhabi Bank, GIB Capital, Mizuho, MUFG, Natixis, Riyad Capital, SMBC Nikko and Standard Chartered Bank.

Aramco disclosed several redemption options for the bonds, such as redemption at maturity, upon an event of default or for tax reasons. These options include the issuer’s call, maturity par call and make-whole call. In addition, they encompass investor put and change of control put, all subject to prevailing market conditions. 

ALSO READ: Riyadh raises $11.23bn from Aramco secondary share sale

In February, the state enterprise indicated plans to issue another bond this year. 

Ziad Al-Murshed, executive director of new business development at Aramco, spoke about prioritising long-term goals and plans over short-term ones, hinting at a forthcoming timeframe.  

He said that the company could issue longer-term bonds of up to 50 years and might offer these financial instruments in 2024 as market conditions improve. 

Globally, Saudi Arabia has emerged as the leading issuer of international bonds among emerging markets, surpassing China with $33.2bn in bond sales to date, as reported by Bloomberg in June.  

This marked the first time in 12 years that China was displaced from the top spot, driven by an 8% growth in Saudi Arabia’s bond sales this year, according to Bloomberg.  

The kingdom’s pace of borrowing is driven by increasing support from global debt investors for its Vision 2030 plan, which aims to diversify the Saudi economy away from oil dependence and transform the country into a global business hub by the end of the decade.

ALSO READ: Riyadh’s desire for Aramco foreign listing may be waning
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Indrajit Sen

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