Saudi Aramco plans to issue a $10 billion bond to help fund its acquisition of a majority stake in Saudi Arabia’s petrochemicals firm, sources said.
Aramco will start meeting bond investors next week to persuade them to buy its debut international bond, which will help the world's largest oil producer fund the $69.1 billion purchase of the stake in Saudi Basic Industries Corp (SABIC), sources familiar with the matter told Reuters.
The Saudi oil giant, which declined to comment, said on Wednesday it had agreed to buy a 70 percent stake in SABIC from Saudi Arabia's Public Investment Fund (PIF) in one of the largest deals in the global chemicals industry.
The deal could inject billions of dollars into the PIF, giving it the firepower to proceed with its plans to create jobs and diversify the largest Arab economy beyond oil exports.
Aramco has issued local currency bonds in the past, but the planned deal would be its first in the international markets.
International demand for Aramco's bonds is expected to be hefty, given improved conditions across emerging markets, the recent inclusion of Saudi Arabia in key market indexes, and the sheer size of the company, which outweighs peers like Exxon and Shell.
Saudi Arabia gets almost 70 percent of its revenues from oil, and Aramco is the sole holder of Saudi oil concessions.
One of the sources said there was a minor sell-off across the Saudi debt curve on Thursday, as some investors prepared to switch Saudi sovereign paper for the upcoming Aramco securities.
Aramco is expected to meet international bond investors next week in a so-called "roadshow" ahead of the debt sale, which the Saudi energy minister previously said would be around $10 billion in size.
Aramco's acquisition of a stake in SABIC has come after months of talks between Aramco and the PIF, which contributed to the delay of Aramco's planned multi-billion dollar initial public offering.
