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MarketScreener Homepage  >  Equities  >  Saudi Arabian Stock Exchange  >  Saudi Arabian Oil Company    2222   SA14TG012N13

SAUDI ARABIAN OIL COMPANY

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Saudi Aramco plans debt market comeback with multi-tranche bond deal

11/16/2020 | 01:11am EST

* Gulf debt issues surge amid weak oil prices

* Aramco raised $12 billion with issue last year

* Oil firm needs cash for dividends and to buy SABIC

DUBAI, Nov 16 (Reuters) - Saudi Aramco said on Monday it had hired banks for a multi-tranche U.S. dollar-denominated bond issuance, as the world's largest oil company seeks cash amid lower oil prices.

Gulf issuers show no sign of slowing this year's blitz of issues on international debt markets as they work to plug finances hit by weaker oil prices and the coronavirus crisis.

Issuances from the region so far this year have already shot through 2019's record, again surpassing $100 billion.

Goldman Sachs, Citi, HSBC, JPMorgan , Morgan Stanley and NCB Capital were hired to arrange investor calls starting on Monday before the planned transaction, Aramco said in a bourse filing.

Other banks involved in the deal include BNP Paribas , BOC International, BofA Securities , Credit Agricole, First Abu Dhabi Bank , Mizuho, MUFG, SMBC Nikko and Societe Generale, a document issued by one of the banks on the deal showed.

The oil giant, which made its debut in the international debt markets last year by raising $12 billion after receiving more than $100 billion in orders, did not detail the size of the latest proposed issuance.

It planned a benchmark multi-tranche offering consisting of tranches for three, five, 10, 30 and/or 50 years, subject to market conditions, the document said. Benchmark bonds are generally at least $500 million per tranche.

"The backdrop is supportive," said a debt banker on the deal, citing a $1 billion Islamic bond issuance last week from Dubai Islamic Bank, which achieved record low yields.

Aramco needs cash to pay $37.5 billion in dividends for the second half of 2020 and to fund its $69.1 billion acquisition of 70% of Saudi Basic Industries (SABIC), paid by installments until 2028. It raised a $10 billion loan this year.

"Any potential bond offering would be part of the company’s overall funding strategy within its normal course of business and subject to market conditions," Aramco told Reuters in an emailed statement when asked for details about the issue.

SAUDI RISK

Hasnain Malik, head of equity strategy at Tellimer, said: "In a world searching for yield there should be no shortage of demand. But persistent low oil prices and the threat that poses to long-term cash generation should be reflected in pricing."

Ratings agency Fitch revised its outlook last week on Aramco to negative from stable, a day after similar action on the sovereign of Saudi Arabia, which holds a controlling stake in the oil giant. The government's finances are heavily reliant on the hydrocarbon industry.

"This reflects the influence the state exerts on the company through strategic direction, taxation and dividends, as well as regulating the level of production in line with OPEC commitments," Fitch said.

Aramco's outstanding U.S. dollar-denominated bonds due in 2029 were trading at 2.05% on Monday, a slightly higher yield than Saudi government paper with a similar maturity, Refinitiv data showed.

A bond prospectus, seen by Reuters, detailed risks for investors, including the COVID-19 virus and the Saudi government's decisions on oil production and spare capacity.

"Saudi Aramco's costs of complying with such decisions, may not maximise returns for Saudi Aramco," the prospectus said, citing possible restrictions on its oil output.

Aramco reported a 44.6% drop in third-quarter net profit this month as the pandemic continued to choke demand and weigh on crude prices. (Reporting by Yousef Saba and Davide Barbuscia; Editing by Richard Pullin and Edmund Blair)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BNP PARIBAS -0.10% 44.39 Real-time Quote.3.05%
BOC INTERNATIONAL (CHINA) CO., LTD. -0.27% 25.65 End-of-day quote.-7.33%
CRÉDIT AGRICOLE SA -1.18% 10.085 Real-time Quote.-1.11%
FIRST ABU DHABI BANK P.J.S.C. 0.53% 15.06 End-of-day quote.16.74%
HSBC HOLDINGS PLC 1.92% 415.85 Delayed Quote.7.69%
MITSUBISHI UFJ FINANCIAL GROUP, INC. -0.99% 489.7 End-of-day quote.7.37%
MIZUHO FINANCIAL GROUP, INC. -1.50% 1411 End-of-day quote.7.92%
SAUDI ARABIAN OIL COMPANY -0.29% 34.8 End-of-day quote.-0.57%
SAUDI BASIC INDUSTRIES CORPORATION 0.19% 103.8 End-of-day quote.2.37%
SOCIÉTÉ GÉNÉRALE -0.96% 16.922 Real-time Quote.0.36%
SUMITOMO MITSUI FINANCIAL GROUP, INC. -1.71% 3383 End-of-day quote.6.12%
THE NATIONAL COMMERCIAL BANK 0.22% 45.35 End-of-day quote.4.61%
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Financials
Sales 2020 819 B 218 B 218 B
Net income 2020 203 B 54 194 M 54 194 M
Net Debt 2020 317 B 84 505 M 84 505 M
P/E ratio 2020 33,5x
Yield 2020 3,96%
Capitalization 6 956 B 1 854 B 1 854 B
EV / Sales 2020 8,88x
EV / Sales 2021 6,64x
Nbr of Employees 79 000
Free-Float 1,76%
Chart SAUDI ARABIAN OIL COMPANY
Duration : Period :
Saudi Arabian Oil Company Technical Analysis Chart | 2222 | SA14TG012N13 | MarketScreener
Technical analysis trends SAUDI ARABIAN OIL COMPANY
Short TermMid-TermLong Term
TrendsBearishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 17
Average target price 32,56 SAR
Last Close Price 34,80 SAR
Spread / Highest target 12,1%
Spread / Average Target -6,44%
Spread / Lowest Target -31,0%
EPS Revisions
Managers and Directors
NameTitle
Amin bin Hasan Al-Nasser President, CEO & Executive Director
Yasir bin Othman Al-Rumayyan Chairman
Khalid H. Al-Dabbagh Senior VP-Finance, Strategy & Development
Ahmad Abdul Rahman Al-Sa'adi Senior Vice President-Technical Services
Mark Moody-Stuart Independent Non-Executive Director
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