Saudi Arabia's state oil giant Saudi Aramco is planning to issue around $2 billion worth of bonds as early as the second quarter this year, in its first bond sale ahead of a much-anticipated initial public offering next year, Bloomberg reported on Tuesday, citing people familiar with the discussions.
Aramco is eyeing the issue of riyal-denominated Islamic bonds, the so-called sukuk, as part of its plans to raise as much as $10 billion in bonds before listing a small portion of the oil giant, currently slated for some time in 2018. The debut sukuk bond could be a private placement with investors, Bloomberg's sources said.
Last month reports had it that Aramco had picked HSBC Holdings' local unit HSBC Saudi Arabia, as well as Riyad Capital, to advise it on the sale of riyal-denominated Islamic bonds before the end of the first half this year. In addition, NCB Capital Co and Alinma Investment Co were also said to be working on the sukuk sale, which is part of Aramco's plans to generate $10 billion in bond sale proceeds in 2017, according to Bloomberg.
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As the expected timeline for Aramco's much-hyped IPO is drawing nearer, industry analysts and observers have been attempting to evaluate how much the company is really worth, and whether its total worth is close to the $2 trillion that Saudi officials have been claiming.
International fund managers and institutional investors largely expect Saudi Aramco to be valued at up to $1.5 trillion in the IPO, according to a survey by investment bank EFG Hermes. Some of the other recent attempts at valuing Aramco have placed the company's total worth at somewhere between $400 billion and $1 trillion, according to various assumptions about the tax rate, the cost of capital, its ability to generate cash flow, various oil price projections, and potential political sensitivity for future investors.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More