Aramco raises $6bn through bond deal that attracted $33bn in orders

Three-trance transaction is first bond issuance for the global energy giant in three years

Saudi Aramco, the world's biggest oil exporting company, first tapped the international bond market in 2019. Bloomberg

Saudi Aramco, the world's biggest oil-producing company, has raised $6 billion (Dh22.02 billion) through its first bond issuance in three years in a deal that attracted orders worth $33 billion.

The US dollar-denominated senior unsecured bonds were sold under Aramco’s Global Medium Term Note Programme, the company said on Thursday.

The deal comprised three tranches of $2 billion each with maturities of 10, 30 and 40 years. The transaction was priced on July 10 and the notes are listed on the London Stock Exchange.

Aramco had initially planned to raise $5 billion but increased the amount after strong investor response to the debt sale, its first after raising $6 billion from international investors in 2021.

Achieving a negative issue premium across all tranches is a testament to our unique credit proposition

Ziad Al Murshed,
chief financial officer, Aramco

The order book of Aramco’s issuance was more than six times oversubscribed, based on the initial $5 billion target. The deal generated “strong demand from a diverse base of investment-grade focused institutional investors”, the company said.

All three tranches were favourably priced with a “negative” new issue premium – the extra spread that investors are paid for buying a company's new issue relative to its existing bonds – reflecting the strength of Aramco’s credit profile.

Ziad Al Murshed, Aramco chief financial officer, said the company received interest from both existing and new investors from across the world.

“Our order book exceeded $33 billion 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,” he said.

"We have consistently demonstrated our financial discipline, while delivering on shareholder value and business growth, and we aim to maintain a strong investment-grade credit rating across business cycles.”

The Aramco deal is the latest among corporate, sovereign and quasi-sovereign issuers in the six-member economic bloc of GCC, which is tapping bond markets to extend maturities, pay existing debts and raise finances for funding new projects.

GCC debt capital market issuances are set to rise through 2024 and 2025 and are steadily approaching $1 trillion in aggregate outstanding amount, Fitch Ratings said in a report in May.

Government issuances will be driven by expected lower oil prices and interest rates as well as initiatives to develop the debt markets and further diversify funding channels, according to Fitch.

Aramco is a regular bond issuer and first tapped the market in 2019, followed by a 50-year bond offering in 2020.

The company is at the heart of the kingdom’s cash flow plans as the Arab world’s biggest economy continues to pursue its economic diversification agenda.

Last month, the government sold part of its stake in Saudi Aramco, which ultimately generated $12.35 billion in proceeds for Riyadh.

In May, Saudi Aramco said it expects to pay $31 billion in dividends to the Saudi government and its shareholders, despite reporting a lower profit in the first quarter due to lower oil prices.