Saudi Aramco chooses hybrid sukuk structure
dubai — Saudi Aramco has chosen a commonly used hybrid structure for a domestic offer of riyal-denominated Islamic bonds that will be the state-owned oil giant’s first debt sale, the prospectus for the offer showed.
The debt issue is part of the state-owned oil giant’s plans to develop new sources of finance in an era of low oil prices. They include what could be the biggest ever stock market listing in history next year.
At least 51 per cent of the funds raised in the debt issue would be used in a mudaraba agreement, a form of Islamic investment management partnership, according to the prospectus. The money would be invested in Aramco’s business and used for general corporate purposes.
No more than 49 per cent would be used in a murabaha facility that would trade commodities with a special purpose vehicle. This could help to finance payments on the sukuk.
Aramco began meeting with potential sukuk investors on Wednesday and the sale may take place as early as next week, banking sources said on Wednesday.
It is part of a SR37.5 billion sukuk issuance programme established by Aramco.
The prospectus gave no indication of the planned pricing or size of the sukuk sale. Bankers told Reuters in February that they expected a deal of roughly SR3 to SR6 billion ($805 million to $1.6 billion).
The prospectus said foreigners may own the sukuk, including those who are not resident in Saudi Arabia.
The sukuk will be tradable through the stock exchange, the prospectus showed, although it warned that trading may not begin immediately after issue because a registry agreement with the exchange may not have been signed by then.
Arrangers and joint lead coordinators of the Aramco sukuk are Alinma Investment, HSBC Saudi Arabia, NCB Capital and Riyad Capital. They are joined by GIB Capital, Samba Capital and Saudi Fransi Capital for dealer roles.