Saudi Aramco raises $6 billion with debut sukuk



(Updates with launch, size, final demand, spreads)

By Yousef Saba and Scott Murdoch

DUBAI, June 9 (Reuters) - Saudi Arabian oil giant Aramco 2222.SE locked in another $6 billion on Wednesday to help fund a large dividend as it returned to the international debt markets with its first U.S. dollar-denominated sukuk sale, a document showed.

The debt issuance, which will help fund a $75 billion dividend commitment that will mostly go to the government, comprises tranches of three, five and 10 years, a document from one of the banks arranging the deal and seen by Reuters showed.

Aramco sold $1 billion in the three-year tranche at 65 basis points (bps) over U.S. Treasuries (UST), $2 billion in the five-year portion at 85 bps over UST and $3 billion in 10-year paper at 120 bps over UST.

Initial price guidance was around 105 bps over UST for the three-year bonds, around 125 bps over UST for the five-year notes and around 160 bps over UST for the 10-year tranche.

The spreads were tightened after the deal attracted combined orders of more than $60 billion.

Aramco last year maintained its promised $75 billion annual dividend to shareholders despite lower oil prices, and is expected to shoulder significant domestic investments in Saudi Arabia's plans to transform the economy.

Fitch assigned Aramco's sukuk issuance programme an A1 rating with a negative outlook, in line with the negative outlook on existing Aramco ratings and tracking a change in Saudi Arabia's sovereign outlook to negative in May last year.

"The company has displayed a strong commitment to pay $75 billion in annual dividends, which in Moody's view is not sustainable should oil prices fall and remain significantly below $60/bbl," Fitch said.

"Interlinkages between Saudi Arabia and the company imply that any change in rating outlook on the government of Saudi Arabia would be mirrored on Saudi Aramco's rating outlook."

The company chose to issue Islamic bonds over conventional ones due to high demand for the instrument as a result of the low number of dollar sukuk sales in the Gulf this year, a source told Reuters on Monday.

Aramco has been widely expected to become a regular bond issuer after its debut $12 billion issuance in 2019 was followed by an $8 billion, five-part transaction in November last year, also used to fund its dividend.

A source had told Reuters that Aramco was expected to raise up to $5 billion with the deal, which had 29 active and passive bookrunners working on it.

Active bookrunners on the deal included Citi C.N , HSBC HSBA.L , JPMorgan JPM.N , NCB Capital 1180.SE and Standard Chartered Bank STAN.L . Passive bookrunners included BOC International 601696.SS and Dubai Islamic Bank DISB.DU .
Reporting by Yousef Saba in Dubai and Scott Murdoch in Hong Kong; Editing by Edwina Gibbs, Jan Harvey and Elaine Hardcastle

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