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    2010   SA0007879121


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Saudi Aramco in early talks on jumbo debt deal

09/05/2018 | 11:12am EDT
FILE PHOTO: General view of Aramco tanks and oil pipe at Saudi Aramco's Ras Tanura oil refinery and oil terminal

LONDON (LPC) - Oil and gas giant Saudi Aramco is having preliminary talks with banks about a potential debt financing of up to $70 billion (54.7 billion pounds)

to back its acquisition of a majority stake in Saudi petrochemical firm Sabic, banking sources said on Wednesday.

Aramco is looking at buying a strategic stake in Sabic, the world's fourth-biggest petrochemicals company, from Saudi’s Public Investment Fund (PIF), which owns a 70% stake worth around US$70bn.

Bankers say a potential financing of US$50-70bn is a strong possibility. A deal of this size would set a new record for the region and give sovereign wealth fund PIF cash to fund Saudi’s ambitious Vision 2030 plan to diversify its oil-dependent economy.

"This is the big one, it could be the largest Middle East deal ever – the deal of the decade in terms of quantum. We are very interested in it and we are actively pitching for it,” a banker said.

Aramco’s acquisition of a stake in Sabic follows Saudi Arabia’s postponement of its plans in August to raise US$100bn by listing 5% of Aramco in 2019, which would have been the biggest IPO ever.

One US investment bank's syndicated loans team is holding discussions with Aramco this week, a second banker said.

Discussions about Aramco’s financing are expected to get underway in earnest next week after PIF signs a US$11bn five-year syndicated loan, which will also help to fund Saudi’s economic transformation plans.

“There have been soft but high level discussions. I think Saudi is trying to make banks focus on the current (PIF) deal but is also preparing banks for what is coming,” the first banker said.

Aramco was not immediately available for comment.

Bankers expect a bond-heavy structure, with around 80% of the total consisting of a one or two year bridge loan to bond issues and 20% of the deal consisting of a five-year term loan. Bankers expect Aramco to issue bonds to refinance the bridge loan in 2019.

“It will be a one or two year bridge loan with a five year term loan of about 20% of the amount asked for. There will be good appetite in the bond market to take it out,” the first banker said.

Aramco is expected to approach relationship banks to discuss how a deal could be structured and will follow these discussions with a request for proposals. Banks will be seen on a bilateral basis, as with the recent PIF loan.

The size of the potential financing will require some preparatory work. While Saudi Arabia’s credit rating of A-/A1 by S&P and Moody’s is not a concern, some banks could have to temporarily increase their country limits, bankers said.

“The credit is easy, the quantum less easy, it will all be about country limits. Although Saudi Arabia is highly rated country limits are not unlimited,” the first banker said.

“It’s a unique transaction and we can increase country limits just for this transaction - a lot of banks will need to do this,” he said.

(Editing by Tessa Walsh)

By Sandrine Bradley

ę Reuters 2018
Stocks mentioned in the article
ChangeLast1st jan.
SAUDI ARABIAN OIL COMPANY 0.00% 34.95 End-of-day quote.-0.14%
SAUDI BASIC INDUSTRIES CORPORATION 0.33% 122.8 End-of-day quote.21.10%
TEAM, INC. 1.63% 6.26 Delayed Quote.-43.67%
VISION INC. 2.46% 1123 End-of-day quote.8.40%
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07/15SAUDI BASIC INDUSTRIES : SABIC and DSM combine efforts to create DYNEEMA« produc..
07/12Saudi Aramco drops Morgan Stanley on gas pipelines deal -sources
07/08SAUDI BASIC INDUSTRIES : SABIC Celebrates 50th Anniversary of Moka Manufacturing..
07/01SAUDI BASIC INDUSTRIES : SABIC board of director recommends distributting SR 5,2..
07/01KHALID AL-DABBAGH : Aramco CFO Khalid al-Dabbagh steps down
07/01SAUDI BASIC INDUSTRIES : SABIC named global company of the year for its contribu..
06/30MARKET CHATTER : Aramco CFO to Step Down; Successor Named
06/30SAUDI BASIC INDUSTRIES : SABIC's new LNP™ ELCRES™ EXL resin delivers..
More news
Sales 2021 155 B 41 303 M 41 303 M
Net income 2021 17 675 M 4 713 M 4 713 M
Net Debt 2021 2 116 M 564 M 564 M
P/E ratio 2021 20,0x
Yield 2021 2,96%
Capitalization 368 B 98 240 M 98 243 M
EV / Sales 2021 2,39x
EV / Sales 2022 2,37x
Nbr of Employees 35 000
Free-Float 30,0%
Duration : Period :
Saudi Basic Industries Corporation Technical Analysis Chart | 2010 | SA0007879121 | MarketScreener
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus UNDERPERFORM
Number of Analysts 12
Last Close Price 122,80 SAR
Average target price 112,77 SAR
Spread / Average Target -8,17%
EPS Revisions
Managers and Directors
Yousef bin Abdullah Al-Benyan Vice Chairman & Chief Executive Officer
Timothy D. Leveille Executive Vice President-Corporate Finance
Khalid Hashim Al-Dabbagh Chairman
Bob Maughon Executive Vice President-Technology & Innovation
Khaled Hamza Nahas Independent Director
Sector and Competitors