Saudi Aramco, the largest oil company in the world, has issued a $4 billion four-tranche bond, which has attracted strong demand amongst the investors for its first foray into global debt markets this year.
The fixed-income news service IFR stated on Monday that the state-owned oil giant has issued $500 million, $1.5 billion, $1.25 billion, and $750 million in bonds with maturities of three, five, 10, and 30 years, respectively.
IFR reported that the offering order books topped 21 billion, indicating strong investor interest, allowing Aramco to narrow the spread of the three-year bond to 60 bps over US Treasuries, compared to an initial guidance of 100 bps.
However, the five-year tranche was priced at 80 bps over US Treasuries, narrowing against an initial guidance of 115 bps. IFR added that the 10-year bond and the 30-year bond were settled at 95bps and 130bps, as opposed to the initial pricing of approximately 125bps and 165bps over the US Treasuries.
Aramco last accessed debt markets in September, surging $3 billion with a sale of sukuk, or Islamic bonds, following a bond sale in May for $5 billion. It had remained absent from the debt markets for three years until it returned to increase $6 billion in July 2024.
Aramco stated last August that it intends to cut costs company-wide and divest assets as crude prices dropped and increased in its debut, long a cash cow for the Saudi government.
Aramco will pay an annual total dividend of approximately $85.4 billion in 2025, a decrease of around 30 percent since 2024 as dividends based on free cash flow reduced. Therefore, Aramco is directly owned by the government by almost 81.5 percent, and the sovereign wealth fund PIF by another 16 percent.
Reuters had previously covered the cost-cutting and divestment actions by Aramco, ahead of its confirmation of its chief financial officer in an earnings call, such as a proposed sale of gas plants. Aramco has also financed through other sources.
It had signed an $11 billion lease and leaseback agreement of its Jafurah gas processing plants in the previous year with a group headed by Global Infrastructure Partners (GIP), part of BlackRock.
The Saudi government eventually raised $12.35 billion by divesting a stake of 0.64 percent in Aramco in 2024. Citi, Goldman Sachs, HSBC, JPMorgan, and Morgan Stanley were active bookrunners, while Abu Dhabi Commercial Bank, Bank of China, BofA Securities, BSF Capital, Emirates NBD Capital, First Abu Dhabi Bank, Mizuho, MUFG, Natixis, Riyad Capital, SMBC, and Standard Chartered were passive bookrunners for the debt sale.
