Saudi oil giant Aramco has reentered the debt market after three years, planning to raise at least $3 billion through bonds maturing in 10, 30, and 40 years.
This move comes as Gulf entities leverage favorable market conditions, with Saudi Arabia issuing $12 billion in bonds and $5 billion in sukuk earlier this year. Aramco last issued global debt in 2021, raising $6 billion.
Aramco, a major revenue source for Saudi Arabia, will declare $124.3 billion in dividends for 2024, primarily benefiting the Saudi government and its Public Investment Fund (PIF).
Recently, Aramco awarded $25 billion in gas expansion contracts, bought a 10% stake in Renault and Geely’s venture, and agreed to purchase liquefied natural gas from Sempra.
Analyst Yousef Husseini suggests the bond sale indicates Aramco’s ongoing aggressive acquisition strategy. The Saudi government, which owns 81.5% of Aramco, recently raised $11.2 billion by selling shares to support its Vision 2030 economic diversification plan. PIF has also raised nearly $8 billion from debt sales.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, notes Saudi Arabia’s significant investment needs continue, with debt markets helping to ease domestic funding pressures. Citi, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, and SNB Capital will lead the bond sale, with additional banks as joint passive bookrunners. Aramco’s 40-year bond will be its second-longest after notes due in 2070.
Donald Trump criticized the Federal Reserve’s recent decision to cut its benchmark interest rate by half a percentage point, calling it a “political maneuver” and suggesting that a smaller reduction would have been more appropriate.
The Bank of Japan (BOJ) has opted to keep interest rates steady at 0.25%, leading to a sharp rise in the Nikkei index, which jumped over 700 points.
On September 18, the US Federal Reserve made a notable move by cutting interest rates by 50 basis points, marking the start of a new easing cycle.
The Federal Reserve’s recent 50 basis point rate cut left experts divided.