MEOG: Aramco to launch another bond

Majority state-owned Saudi Aramco is preparing to raise up to $3bn through a new issuance of US dollar-denominated sukuk, or Islamic bonds, sources told Reuters this week. The offering, which will include five and ten-year bonds, reflects the company's ongoing strategy to diversify its funding sources and capitalise on favourable market conditions.

Investor calls are scheduled to take place this week as part of the process, although Aramco has not yet publicly disclosed the full details of the bond size. The issuance follows the state-owned energy giant’s $6bn bond sale in July, its first in three years.

Leading global and regional banks, including Citigroup, HSBC, Goldman Sachs and Dubai Islamic Bank, will act as bookrunners for the deal, according to a term sheet reviewed by Reuters.

The planned sukuk issuance comes as Aramco continues to play a critical role in supporting Saudi Arabia's economic transformation efforts under its Vision 2030 programme, which aims to diversify the kingdom’s economy away from oil dependence.

As part of these efforts, Aramco’s revenues have become a key source of funding for government investments in new industries and infrastructure projects. In 2024, Aramco is expected to pay out $124.3bn in dividends, with the vast majority going to the Saudi government, which owns an 81.5% stake in the company. The kingdom's sovereign wealth fund, the Public Investment Fund (PIF), holds another 16%.

Saudi Arabia’s Ministry of Energy has recently ordered a halt to plans to increase Aramco's maximum sustainable oil production capacity to 13mn barrels per day. Currently, the company pumps around 9mn bpd, about 25% below its maximum capacity, reflecting the government's focus on balancing energy market dynamics with long-term financial strategies.

Amid rising demand for diversification, Aramco is exploring additional financing options, including bond issuances and potential share sales. Reports have surfaced indicating that the company could sell more shares to raise approximately $20bn, although Aramco officials have declined to comment on these reports.

The upcoming sukuk issuance marks a continued effort by Aramco to strengthen its financial position, optimise its capital structure, and support the kingdom’s broader economic ambitions. The company is expected to announce its annual financial results and dividend payments in March, following the introduction of a performance-based dividend last year, which signalled its focus on shareholder value.

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