Order books for the sale of Islamic bonds, or sukuk, are worth more than $ 60 billion, Bloomberg News told people familiar with the matter.
Saudi Aramco, the world’s largest energy company, sells $ 6 billion worth of bonds in its first dollar-denominated Islamic bond sale.
The state-controlled company offers sukuk in three, five and 10 years, and the longest part will give 120 basis points over Treasury, according to a person familiar with the matter. This is down from the initial discussions of about 160 basis points.
Order books for sale are more than $ 60 billion, say people familiar with the transaction, who have asked not to be identified as the details are private.
The company is raising funds to help fund its plans to pay $ 75 billion in dividends, a commitment the oil company has made to gain support for its initial public offering. Aramco will reduce spending, cut jobs and sell non-core goods as the spread of coronavirus and widespread blockages slowed oil demand last year, the main source of revenue for Arabia. Saudi Arabia.
The price of Brent crude has picked up, after a 21-year low of just under $ 16 a barrel to a point in 2020. It has since climbed more than fourfold to more than $ 70 a barrel.
And while Aramco’s first-quarter profits are up – thanks to the recovery of both crude oil and gas – its free cash flow is less than the $ 18.75 billion needed to pay the dividend for the period. .
Aramco’s oil revenues account for about 40% of Saudi Arabia’s gross national product and recent rise in crude oil prices could lead to even more, Bloomberg Intelligence analysts wrote in a note Tuesday. Jaimin Patel and Damian Sassower. Saudi Arabia’s plans to reduce its dependence on Aramco will be challenged by the nation’s fiscal deficit, they said.