Saudi Aramco, the world’s biggest oil company, is set to return to the bond markets for the first time since April of last year as it seeks to fund a $75 billion dividend commitment.
The company, which hired banks including Goldman Sachs Group Inc. for the bond sale, needs to raise debt after slumping crude prices caused profit to fall by 45% in the third quarter. That’s left it unable to generate enough cash to fund the investor payouts, most of which go to the Saudi government, which needs the money to plug a widening budget deficit.
Aramco has slashed spending, cut jobs, and is considering selling some assets. Despite these efforts to conserve cash, its gearing — a measure of debt as a percentage of equity — has risen to 21.8%, above its target range of 5% to 15%.
The state-controlled energy firm, which sold shares on the Saudi stock exchange last year, will hold calls with fixed-income investors starting from Monday, according to a person familiar with the matter. A dollar deal with tranches maturing in three, five, 10, 30 and 50 years may follow, depending on investor demand, the person said.
Aramco would look at using “all the instruments available to us,” Chief Executive Officer Amin Nasser said in June.
Aramco’s debut bond sale last year raised $12 billion and was one of the most oversubscribed debt offerings in history, attracting more than $100 billion in investor orders.
The other banks chosen by Aramco as active bookrunners for the new deal are Citigroup Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Morgan Stanley and Riyadh-based NCB Capital.