Saudi Aramco plans to continue tapping the debt markets for more borrowings to fund growth, CEO Amin Nasser told Bloomberg TV after the world’s biggest oil firm issued a three-part U.S. dollar-denominated bond this week.
The Saudi state oil giant is issuing a total of $5 billion in five, ten, and 30-year bonds, in U.S.-dollar denominated international bonds under its Global Medium Term Note Programme.
The offering end date is June 2, and the exact issuance amounts are subject to market conditions, Aramco said.
Lower oil prices have reduced Aramco’s cash flows in the first quarter of the year, and the second quarter will likely show even larger declines in cash flow and profits as prices slumped.
So raising more debt is a means for Aramco to support its huge dividend, most of which goes to the Kingdom of Saudi Arabia, the shareholder of 98% of Aramco.
The Saudi oil firm’s debt has risen in recent months, but it’s still the lowest of any major oil company.
“Our gearing today is around 5%, still one of the lowest,” Aramco’s Nasser told Bloomberg TV.
“We will continue to tap into that additional bond markets in the future,” the executive added.
At the end of last year, Saudi Aramco’s chief financial officer, Ziad Al-Murshed, said that the oil giant plans to regularly tap the bond market for debt issuance as it looks to optimize capital structure and widen its investor base.
Aramco returned to the debt market in 2024, following three years of absence, with two bond issues in which it sold a combined $9 billion in debt.
Saudi Arabia relies on income from oil exports and Aramco’s dividend payouts to finance an ambitious Vision 2030 program, with which the Saudi Crown Prince, Mohammed bin Salman, wants to turn the Kingdom into an investment-friendly destination of doing business and grand projects to reduce reliance on oil.
By Tsvetana Paraskova for Oilprice.com
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