Saudi Aramco kicks off its first dollar bond sale this year

[RIYADH] Saudi Aramco started the sale of dollar-denominated debt, extending the company’s borrowings as it looks to leverage its balance sheet.

The world’s biggest oil exporter is selling bonds with five, 10 and 30-year maturities, according to a person with knowledge of the matter. The company raised US$9 billion in dollar and Islamic debt last year, and chief financial officer Ziad Al-Murshed had said more issuances were on the cards.

Aramco’s net debt rose to the highest in almost three years in the first quarter as it spends tens of billions of dollars on operations and a massive dividend at a time when oil prices have softened. The company’s gearing ratio – a measure of its indebtedness – of 5.3 per cent is far below that of most other major international oil companies, giving it room for more borrowings.  

Aramco raised US$6 billion in July last year, its first dollar debt sale in three years. It followed that up with a US$3 billion dollar-denominated Sukuk bond in September. 

The latest bonds also come amid a debt spree by Saudi Arabia’s government and affiliated companies. The kingdom’s debt levels surged in the first quarter, as it borrows funds to help cover an expected budget shortfall resulting from an ambitious economic diversification plan. BLOOMBERG