Saudi Arabia close to securing $10b bank loan

JP Morgan, HSBC, Bank of Tokyo-Mitsubishi are lead arrangers as world’s top oil exporter seeks to fill record budget deficit

Saudi Arabia is close to securing a $10 billion (Dh36.7 billion) loan from banks, sources told Reuters yesterday, as the world’s top oil exporter seeks to fill a record budget deficit caused by low crude prices.

The kingdom had initially been seeking to raise between $6 billion and $8 billion through a loan lasting for five years for its first foreign borrowing JPMorgan Chase & Co and Michael Klein, the former Citigroup Inc investment banker who runs his own boutique, have been selected to advise on state-owned Saudi Arabian Oil Co’s initial public offering, according to people familiar with the matter.

Klein is providing strategic advice to the government, while JPMorgan is working on preparations for the IPO and may be among the banks that underwrite the listing, the people said, asking not to be named as the details aren’t public.

The deliberations are still at an early stage, and no final decisions about the IPO have been made, they said. Saudi Arabia’s Prince Mohammad Bin Salman is working on a plan to list shares in Aramco, as the business is known, on the country’s domestic stock exchange as early as 2017. in more than a decade. But the Ministry of Finance raised the amount after drawing significant demand.

The sources said the loan should be signed before the end of April. Two of the sources said the pricing was around 120 basis points above the London interbank offered rate.

One of the sources said the lenders included a mix of US, European and Japanese banks.

Another said the lead arrangers included JP Morgan, HSBC and Bank of Tokyo-Mitsubishi. Each was contributing around $1.3 billion, with the remainder of the loan coming from other lenders, the source said.

JP Morgan and HSBC declined to comment and nobody was immediately available to comment from Bank of TokyoMitsubishi.

Nobody was available to comment from the Saudi central bank or the finance ministry.