Aramco seeks $10 billion to finance SABIC acquisition

[Tom Kirkman + 8,860]

This seems ... odd.  

SABIC - Saudi Basic Industries Corp - Company Info from Bloomberg

Aramco seeks $10bn to finance Sabic acquisition

Saudi Aramco, the world's largest oil producer, is in early talks with banks for a loan of about $10 billion to help finance its acquisition of a 70 per cent stake in Saudi Basic Industries Corp (Sabic), according to three banking sources, said a Reuters report.
 
Aramco agreed last year to buy the controlling stake in Sabic from the kingdom's wealth fund for $69.1 billion, sealing one of the biggest-ever deals in the global chemical industry.
 
"The financing would be for the Sabic deal, but the borrower is Aramco," said one of the sources, adding that the discussions were at an initial stage, with the company sounding out banks.
 
"Ten billion dollars is where they want to get to, (it's) not clear if, in this market, they'll manage to reach that."
 
A second source said banks involved in the talks included HSBC and JPMorgan, as well as lenders in the Gulf. 
 
In response to a Reuters request for comment about whether it was seeking such a loan, Saudi Aramco said: "The company continues to review its financial options as part of its normal course of business, while prudently preserving its pristine balance sheet and its resilience."   ...

 

... Aramco's shares closed at $31.10 on Tuesday, below the $32 price of its IPO late last year that initially raised $25.6 billion and became the world's largest.
 
Saudi Arabia, which owns more than 98 per cent of the oil giant, is likely to sell new international bonds soon, according to sources, as the output cut deal further squeezes revenues hit by the plunge in oil prices.
 

[Rob Plant + 2,610]

9 minutes ago, Tom Kirkman said:

This seems ... odd.  

SABIC - Saudi Basic Industries Corp - Company Info from Bloomberg

Aramco seeks $10bn to finance Sabic acquisition

Saudi Aramco, the world's largest oil producer, is in early talks with banks for a loan of about $10 billion to help finance its acquisition of a 70 per cent stake in Saudi Basic Industries Corp (Sabic), according to three banking sources, said a Reuters report.
 
Aramco agreed last year to buy the controlling stake in Sabic from the kingdom's wealth fund for $69.1 billion, sealing one of the biggest-ever deals in the global chemical industry.
 
"The financing would be for the Sabic deal, but the borrower is Aramco," said one of the sources, adding that the discussions were at an initial stage, with the company sounding out banks.
 
"Ten billion dollars is where they want to get to, (it's) not clear if, in this market, they'll manage to reach that."
 
A second source said banks involved in the talks included HSBC and JPMorgan, as well as lenders in the Gulf. 
 
In response to a Reuters request for comment about whether it was seeking such a loan, Saudi Aramco said: "The company continues to review its financial options as part of its normal course of business, while prudently preserving its pristine balance sheet and its resilience."   ...

 

... Aramco's shares closed at $31.10 on Tuesday, below the $32 price of its IPO late last year that initially raised $25.6 billion and became the world's largest.
 
Saudi Arabia, which owns more than 98 per cent of the oil giant, is likely to sell new international bonds soon, according to sources, as the output cut deal further squeezes revenues hit by the plunge in oil prices.
 

Tom is it really that odd??

Most aquisitions have banking debt!

Whilst in the current climate interest rates on any debt are negligible so it makes good sense to me.

[Tom Kirkman + 8,860]

2 minutes ago, Rob Plant said:

Tom is it really that odd??

Most aquisitions have banking debt!

Whilst in the current climate interest rates on any debt are negligible so it makes good sense to me.

Understood.  But why now?

[Rob Plant + 2,610]

32 minutes ago, Tom Kirkman said:

Understood.  But why now?

Again because interests rates have recently fallen through the floor I'd guess.

I think you're maybe trying to see more than there is here, could be wrong often am.

[Tom Kirkman + 8,860]

1 minute ago, Rob Plant said:

Again because interests rates have recently fallen through the floor I'd guess.

I think you're maybe trying to see more than there is here, could be wrong often am.

You are probably right.  A bit of information overload this morning.  I blame those darn Chinese Spammers for choking my mental bandwidth today.

[BLA + 1,666]

UAE, Qatar, Dubai, Oman all floated bond sales within the last month.

Saudis attributing the reason for the financing to Sabic is just a cover. This is not the good 'ol days in the ME. They need the cash. Remember ARAMCO IPO guaranteed the $75  Billion dividend . Aramco has to pay the dividend so they can pay the 20,000+ royals their allowance.  Sounds better when they say it is to finance Sabic. 

They need the cash and rates are at historic lows.   JPM trying to unload Saudis Sovereign Wealth Fund unsecured loans.  Bonds for Aramco or the Government is good business for them .  .   secured .

Expect a plethora of bond offerings from the ME.  Actually from everywhere. 

Edited April 17, 2020 by BLA

[John Foote + 1,135]

On 4/16/2020 at 7:08 AM, Tom Kirkman said:

You are probably right.  A bit of information overload this morning.  I blame those darn Chinese Spammers for choking my mental bandwidth today.

You forgetting the silly part. Saudi's already own SABIC. They will be borrowing money to buy it from themselves. Wonder how many pockets are getting lined.