Saudi Aramco launched a massive bond sale early this week in a move that marked the state-controlled oil giants first foray back to the debt markets. The investment will help fund a $75 billion dividend the company has promised shareholders despite current global oil market challenges and the coronavirus pandemic. Aramco has committed to shareholder payouts of $18.75 billion in total in the third quarter, despite seeing third-quarter profit drop of nearly 45% year-on-year amid the oil price slump. Although the amount Aramco is seeking to raise was not disclosed, news wire Bloomberg reported it could be around $6 billion.
The bonds will be sold in tranches, maturing in three, five, 10, 30 and 50 years, subject to market conditions, Aramco said in a filing with the Saudi stock exchange, Tadawul. Citi, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, and NCB Capital will be underwriters of the upcoming bond issue. Aramco issued $12 billion-worth of bonds in several tranches in its first international bond issue, for which it had received more than $100 billion in orders. Aramco has announced spending and job cuts, and has also said it is considering assets sales to meet its dividend obligations. The huge dividend commitment cannot close the Saudi state’s widening budget gap if oil prices remain low beyond 2021. The decision to pay $75 billion in annual dividends was made at a time when Aramco was the world’s most profitable company, and before the coronavirus pandemic decimated oil demand. Saudi Arabia and other major oil-producing nations, including Russia — an alliance known as Opec+ — have since slashed production to help balance the global oil market.