Saudi Gazette report
RIYADH — Saudi Aramco announced on Thursday the completion of a $3 billion dollar-denominated international sukuk offering. The oil giant said that the offering recorded a six times oversubscription, reflecting strong investor demand.
The issuance consisting of two U.S. dollar-denominated tranches: $1.5 billion maturing in 2029, carrying a profit rate of 4.25 percent per annum, and another $1.5 billion maturing in 2034, carrying a profit rate of 4.75 percent per annum.
Aramco’s issuance of sukuk or Islamic bonds was priced on September 25, 2024, and the securities were listed on the London Stock Exchange. In addition, Aramco priced both tranches with a negative new issue premium, reflecting its strong credit profile.
The sukuk offering, which was part of the Trust Certificate Issuance Program of the SA Global Sukuk Limited, ran through until October 2. The minimum subscription was $200,000 with integrated multiples of $1,000 in excess of that amount, subject to market conditions.
The successful sukuk issuance builds on Aramco’s efforts to diversify and broaden its investor base, further enhance liquidity, and re-establish its sukuk yield curve.
“Building on the strong investor reception from our July 2024 bond issuance, this sukuk offering represented an opportunity to engage with a broader investor base,” stated Ziad T. Al-Murshed, Aramco executive vice president and CFO.
Al-Murshed explained that the remarkable demand reflects Aramco’s unique credit proposition. In addition, it highlights the company’s competitive advantage and track record of financial resilience through cycles. It is noteworthy that in July, Aramco raised $6 billion from a three-tranche sukuk that it launched under its Global Medium Term Note Program.
The entities responsible for the issuance of sukuk included several leading financial institutions which served as active bookrunners. They are Al Rajhi Capital, HSBC, First Abu Dhabi Bank, Dubai Islamic Bank PJSC, Standard Chartered Bank, KFH Capital, Goldman Sachs International, JP Morgan, and Citi. Saudi Aramco has mandated these institutions to organize a series of fixed income investor meetings commencing on 24 September, 2024.
Apart from the active bookrunners, a number of other financial firms were named as inactive bookrunners. They are SMBC Nikko, Alinma Investment, Albilad Capital, MUFG, Abu Dhabi Commercial Bank, POCI Asia Limited, Emirates NBD Capital Limited, Sharjah Islamic Bank, Mizuho and Natixis.
Aramco clarified that the sukuk offerings would represent direct, unsubordinated, unsecured and limited recourse obligations of SA Global Sukuk Limited. The net proceeds will be used by Saudi Aramco for general corporate purposes. The offering of the trust certificates were limited to qualified investors in the jurisdictions in which the offering was made in accordance with the rules and regulations of such jurisdictions.
