According to Reuters, Aramco (2222) secured USD 3 billion from the sale of international Sukuk, marking the global oil giant’s first Islamic bond issuance since 2021.
Strong Demand
On Wednesday, the company sold USD 1.5 billion in five-year Sukuk with a margin of 85 basis points above U.S. Treasury bonds, and an additional USD 1.5 billion in ten-year Sukuk at a margin of 100 basis points above the same benchmark.
Due to strong demand, Aramco lowered the pricing of its dollar-denominated five- and ten-year Sukuk.
So what
Bloomberg reported that the world’s largest oil producer received over USD 22 billion in orders for the Sukuk, covering the issuance more than seven times.
This is the second time Aramco has tapped into the debt market this year, amid expectations of large dividend payments, most of which will go to the government, the majority shareholder.
Aramco’s Bond and Sukuk Issuances:
- November 2020: USD 8 billion in medium-term international bonds
- June 2021: USD 6 billion in international Sukuk
- July 2024: USD 6 billion in medium-term international bonds
- September 2024: USD 3 billion in dollar-denominated Sukuk
Some context
Sukuk issuances have surged this year, with Moody’s credit rating agency expecting global sukuk volumes to reach between USD 200 billion and USD 210 billion, surpassing 2023 levels.
This growth is driven by factors like increased deal flows from Saudi Arabia.
Now what
On Thursday, Riyad Bank launched additional Tier 1 sustainable sukuk, denominated in U.S. dollars, through a special purpose vehicle.
The Sukuk will be offered to qualified investors within and outside Saudi Arabia.
The final value and terms will be determined based on market conditions, with a minimum subscription of USD 200,000 and increments of USD 1,000.
The Sukuk is perpetual but can be redeemed after five years and will be listed on the London Stock Exchange’s international market under Regulation S of the U.S. Securities Act of 1933.
