Saudi Aramco, a fully-integrated Saudi state-owned energy company, could return to the debt capital markets in a bid to raise funds to pay out the promised $75bn annual dividend. The world’s largest energy company could raise ~$5bn through the issuance of sukuk instruments in both the offshore and onshore debt markets as early as this month. The profits of the state-run oil company jumped 30% in Q1 as the global oil and gas markets recovered after a poor run last year, during which Aramco’s net profits had declined 44%. However, the free cash flows have been inadequate to cater to the quarterly dividend of $18.75bn, which is vital to Saudi Arabia as it seeks to narrow its budget deficit of 12%, widened by the pandemic and the low oil prices last year. Most of the firm’s dividend payout goes to the Saudi government which holds the majority stake in the oil producer. The company also embarked on a deal to raise $12.4bn by leasing usage rights of its stabilized crude oil pipeline network and had raised another $12bn from its debut international bonds last month. Other Gulf companies could also hit the international bond markets with Qatar Petroleum expected to issue ~$10bn and Energy Development ~$3bn in the coming months.
Saudi Aramco’s bonds were stable. Its 2.875% 2024s was trading at 105.9 points and its 4.25% 2039s was marginally down by 0.17 to trade at 110.38 on the secondary markets.
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