Saudi Arabian Oil Co (Aramco) set final pricing for its debut Islamic bond as the company presses ahead with plans to raise $10 billion in debt. Aramco is selling debt with a seven year tenure in a private placement at 25 basis points over the country’s interbank offered rate. The oil giant is selling debt ahead of an initial public offering in 2018 as the country’s finance ministry plans to cut taxation on the company. The cut will boost Aramco’s net income by 300%, putting per-barrel income in a range similar to that of international oil companies. Aramco’s sukuk follows Saudi Arabia’s $17.5 billion bond issue in October, which was the state’s debut international debt sale. Saudi Arabia is also said to be planning a sale of riyal-denominated Islamic bonds to local institutions to help boost the country’s Islamic bond market.
Global Islamic bonds are poised to extend gains after climbing to a record this week, buoyed by Asian economic growth and a pickup in Persian Gulf issuance.
Dubai Electricity & Water Authority, the government run utility, sold $2 billion of non-Islamic senior unsecured debt yesterday in its largest dollar denominated bond sale.
Islamic Development Bank, a Jeddah based multilateral lender, plans to sell $1 billion of bonds this quarter under a $3.5 billion sukuk program, Vice President Abdul Aziz Al Hinai said August 24. Saudi Arabian Oil Co, based in Dhahran, Saudi Arabia, and Total SA, based in Paris, plan to sell $1 billion in sukuk this year, Simon Eedle, global head of Islamic banking at Credit Agricole SA, the lead arranger of the sale.