Aramco to Seek Advisers for Landmark Dollar Bond, Loan

(Bloomberg) -- Saudi Aramco has sent a request for proposals to banks for its first-ever international U.S. dollar bond and loan to finance the acquisition of petrochemical giant Sabic, according to people familiar with the matter.

The request for proposal is to appoint bookrunners for the international debt sale. The document also seeks to test the lending appetite for a potential bridge facility for the Sabic acquisition, the people said, asking not be named because the matter is confidential. Aramco declined to comment.

Aramco has said it plans to tap the market in the second quarter. The process of accessing the dollar debt market will force the world’s largest oil producer to disclose its accounts to investors for the first time since its nationalization four decades ago. It may also have to make public details about oil reserves and operations.

Aramco is in talks to buy 70 percent of Sabic from the Public Investment Fund, which could cost about $70 billion. Energy Minister Khalid Al-Falih said earlier this month that the size of the offering would not be "huge."

Saudi Arabia’s government sold $7.5 billion of international bonds in January, the first test of how much damage the killing of columnist Jamal Khashoggi inflicted on investor appetite. While early indications showed the kingdom would have to pay up, the premium narrowed substantially as the day went by.

Aramco has lots of room to borrow as there’s hardly any net debt, accounts obtained by Bloomberg News for the first half of 2017 show. At that time, the company had about $20 billion of borrowings, offset by $19 billion of cash and equivalents.

Aramco’s acquisition of Saudi Basic Industries Corp., as Sabic is known, was proposed last year after the planned initial public offering of Aramco was postponed because international investors balked at the crown prince’s $2 trillion valuation. By channeling money from Aramco to the PIF, two arms of the Saudi state, the deal offered another route to free up the cash originally sought from the IPO.

©2019 Bloomberg L.P.