Saudi oil giant Aramco to sell two-part Islamic bond

Saudia Aramco, the world's biggest oil company, has opened books for the sale of a five- and 10-year U.S. dollar Islamic bond, or sukuk, expected to price later on Wednesday, a term sheet seen by Reuters showed.

Aramco, in which the Saudi government is the majority shareholder, planned to raise debt to lever its balance sheet amid weaker oil prices, Reuters reported last week, and could raise between $3 billion and $4 billion from the sale.

The initial price target for the five-year portion was set at 105 basis points over U.S. Treasuries, and 115 basis points for the longer-dated tenor, the term sheet showed.


Aramco's issue comes amid a surge in bond issuance from the Gulf region this month, including Saudi Arabia's $5.5 billion sukuk, driven by strong investor demand and heavy inflows into bond funds.

But it will also test investor appetite for regional deals a day after Israel attempted to kill the political leaders of Hamas with an airstrike on neighbouring Qatar , escalating its military action in the Middle East.

Al Rajhi Capital Company, Citi, Dubai Islamic Bank, First Abu Dhabi Bank, Goldman Sachs International, HSBC, JPMorgan, KFH Capital, and Standard Chartered Bank are mandated active bookrunners on the transaction.

Saudi Aramco did not immediately respond to a request for comment from Reuters on the transaction.