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Saudi Aramco seen raising with dollar sukuk

June 10/2021

MOSCOW (MRC) -- Saudi Aramco, the worlds biggest oil exporter, is floating US dollar-denominated bonds, with the size and tenors still to be determined by market conditions, said Reuters.

Saudi Arabian oil giant Aramco (2222.SE) is likely to raise between USD3 billion and USD4 billion on Wednesday, two sources said, as it returns to the international debt markets with its first U.S. dollar-denominated sukuk sale. The debt issuance, which will at least partly fund a large dividend that mostly goes to the government, will comprise tranches of three, five and 10 years, the term sheet for the sukuk seen by Reuters showed.

Initial price guidance was around 105 basis points (bps) over U.S. Treasuries (UST) for the three-year portion, around 125 bps over UST for the five-year paper and around 160 bps over UST for the 10-year bonds. Aramco last year maintained a promised $75 billion dividend to shareholders - chiefly the government - despite lower oil prices, and is expected to shoulder significant domestic investments in Saudi Arabia's plans to transform the economy.

The company chose to issue Islamic bonds over 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 has been widely expected to become a regular bond issuer after its debut USD12 billion issuance in 2019 was followed by an USD8 billion, five-part transaction in November last year, also used to fund its dividend.

A source had told Reuters that Aramco was expected to raise up to USD5 billion with the deal, which is expected to close later on Wednesday and has 29 active and passive bookrunners working on it.

As per MRC, this is Saudi Aramcos third bond flotation, after its maiden USD12bn issue in April 2019, and a second issuance worth USD8bn in November last year. We remind that in June, Aramco said it had completed the share acquisition of a 70% stake in SABIC from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyals 259.125 billion (USD69.1 billion). Combined, in 2019 Aramco and SABIC recorded petrochemicals production volume of nearly 90 million mt, including agri-nutrient and specialty products.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco's value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
Author:Anna Larionova
Tags:PP, PE, ethylene, propylene, Saudi Aramco, USA.
Category:General News
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