Saudi Arabia: Petrochemicals Saudi Aramco to Issue Bonds worth 10 Billion Dollars
The decision has been undertaken as the company is eyeing for funds in order to acquire a major stake in Sabic. Saudi Aramco has plans to buy a 70 % stake in the firm for 70 billion dollars.
Saudi Arabia – Saudi Aramco has plans to issue bonds worth around 10 billion dollars to help fund its takeover of a majority stake in Sabic.
State-owned Aramco is seeking to acquire a 70 % stake in petrochemical firm Sabic for about 70 billion dollars from Saudi Arabia’s Public Investment Fund which plans to invest the proceeds in a range of non-oil projects from inside and outside the kingdom under the country’s ‘Vision 2030’ reform programme.
The acquisition is a key plank in Aramco’s plans to rebalance its business portfolio towards the fast-growing petrochemicals market and make the company more attractive to international investors ahead of the mooted IPO. This long-delayed operation, which would involve the listing of a 5 % stake in Aramco, is now expected to take place in 2021 after the completion of the Sabic deal.
It is still unclear how much of the Sabic acquisition will be financed by bonds and how much by Aramco’s internal resources and bank loans.
Saudi Arabia’s need to seek international loans to finance its continuing budget deficit is forcing the kingdom to disclose more details of Aramco’s operational and financial performance. The energy ministry recently announced upward revisions to the country’s previously estimated hydrocarbon reserves following an audit by US-based consultants De Golyer & Mac Naughton.
Proven reserves now stand at around 268.5 billion barrels of oil, enough to continue production at current rates for at least another 70 years and 325.1 trillion standard cubic feet of gas as of the end of 2017. The budget deficit is likely to increase again this year in the face of lower-than-expected oil prices and increased public spending. Analysts believe the kingdom needs an oil price above 84 dollars per barrel to balance its budget in 2019.