Saudi Aramco Raises $4 Billion in Bond Markets with Record $21 Billion Demand

Saudi Aramco has completed a $4 billion bond issuance split into four tranches, according to data released by the company. This transaction marks the Saudi oil group's first foray into international debt markets this year. Order books reportedly exceeded $21 billion, reflecting demand more than five times the amount raised. Four-Tranche Issuance Structure The company structured its offering across maturities ranging from 3 to 30 years. The 3-year tranche amounts to $500 million with a final spread of 60 basis points over US Treasuries, down from initial guidance of 100 basis points. The 5-year tranche reaches $1.5 billion at 80 basis points, tightened from 115 basis points. The 10-year bonds represent $1.25 billion at 95 basis points, compared to 125 initially. The 30-year tranche completes the issuance with $750 million at 130 basis points, following initial guidance of 165 basis points. Spread tightening across all maturities reflects strong demand from institutional investors. The 3-year tranche shows the most substantial compression with a 40 basis point reduction. Sustained Debt Market Activity This transaction follows an active bond financing strategy since Aramco's return to markets in July 2024, after a three-year absence. The company had then raised $6 billion. In May, a $5 billion bond issuance preceded a $3 billion sukuk in September. The increased reliance on debt markets comes amid cost-cutting measures and asset divestments, according to the company. Total dividends for 2025 would reach approximately $85.4 billion, representing a roughly 30% decrease from 2024 levels, linked to reduced free cash flow-indexed payouts. Diversification of Funding Sources Aramco has simultaneously diversified its financial resources. A lease and leaseback agreement involving Jafurah gas processing facilities was concluded for $11 billion with a consortium led by Global Infrastructure Partners, a BlackRock subsidiary. The Saudi government also sold a 0.64% stake in Aramco in 2024, generating $12.35 billion. The ownership structure remains concentrated, with nearly 81.5% held directly by the Saudi state and 16% by the sovereign wealth fund Public Investment Fund (PIF). The issuance was managed by a banking syndicate including Citi, Goldman Sachs, HSBC, JPMorgan and Morgan Stanley as active bookrunners. This mobilization of multiple resources raises questions about the group's ability to maintain its distribution levels while financing its strategic projects.

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Saudi Aramco Raises $4 Billion in Bond Markets with Record $21 Billion Demand