Saudi Aramco mandates banks for inaugural dollar sukuk

A view shows branded oil tanks at Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019. REUTERS/Maxim Shemetov/File Photo

Saudi Aramco has hired a large group of banks to arrange its inaugural issuance of U.S. dollar-denominated sukuk, a document showed on Monday, as it seeks cash to fulfil large commitments to its major shareholder, the Saudi government.

The banks will arrange fixed income investor calls starting on Monday, the document from one of the banks showed. An issuance of sukuk in three-, five- and 10-year tranches will follow, subject to market conditions.

The active bookrunners on the deal are Alinma Invest (1150.SE), Al Rajhi Capital (1120.SE), BNP Paribas (BNPP.PA), Citi (C.N), First Abu Dhabi Bank (FAB.), Goldman Sachs International (GS.N), HSBC (HSBA.L), JPMorgan (JPM.N), Morgan Stanley (MS.N), NCB Capital (1180.SE), Riyad Capital (1010.SE), SMBC Nikko (8316.T) and Standard Chartered Bank (STAN.L).

Aramco last year maintained a promised $75 billion dividend despite lower oil prices, and is expected to shoulder significant domestic investments that form part of Saudi Arabia’s plans to transform the economy. read more

Saudi Aramco is seeking to raise up to $5 billion via the sukuk, a source with knowledge of the matter told Reuters last week.

It chose to issue Islamic bonds over conventional ones due to high demand for the instrument as a result of few dollar sukuk sales from the Gulf this year, the source said.

Aramco was widely expected to become a regular bond issuer after its debut $12 billion bond deal in 2019 was followed by an $8 billion, five-part transaction in November last year, also used to fund its dividend.

The sukuk will be used for general corporate purposes, the bond prospectus reviewed by Reuters showed, but analysts and sources have said it will be used, at least in part, to fund Aramco’s dividend.

Passive bookrunners on the deal are CB (CB.), Albilad Capital (1140.SE), AlJazira Capital (1020.SE), Alistithmar Capital, ANB Invest, BOC International (601696.SS), Credit Agricole (CAGR.PA), Dubai Islamic Bank (DISB.DU), Emirates NBD Capital (ENBD.DU), GIB Capital, KFH Capital (KFH.KW), MUFG (8306.T), Mizuho (8411.T), NBK Capital (NBKK.KW), Saudi Fransi Capital (1050.SE) and Societe Generale (SOGN.PA).

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