Saudi Aramco raises $3bn in sukuk despite regional tensions

Saudi Aramco has raised $3 billion through a two-tranche Islamic bond sale, with strong investor demand allowing the state oil giant to tighten pricing even as geopolitical tensions flared after an Israeli strike on Qatar earlier this week.

According to reports, the issuance comprised $1.5 billion in five-year sukuk priced at a 4.125% profit rate and another $1.5 billion in 10-year sukuk at 4.625%. Both tranches’ spreads were tightened by 35 basis points from initial guidance.

Final orders topped $16.85 billion, with peak demand exceeding $20 billion, a separate bank document showed. 

The successful debt sale underscores continued appetite for Gulf issuances, coming days after Saudi Arabia itself raised $5.5 billion from sukuk amid heavy inflows into bond funds. Aramco said proceeds from its sukuk will be used for general corporate purposes.

The offering was managed by Al Rajhi Capital Company, Citi, Dubai Islamic Bank, First Abu Dhabi Bank, Goldman Sachs International, HSBC, JPMorgan, KFH Capital, and Standard Chartered Bank.

Aramco, in which the Saudi government remains the majority shareholder, has increasingly tapped capital markets to diversify its funding sources. Last month, it signed an $11 billion lease-and-leaseback deal for its Jafurah gas processing facilities with a consortium led by Global Infrastructure Partners, part of BlackRock. The consortium is now in talks to raise about $10 billion in debt to support the transaction.

The sukuk issuance also follows weaker oil prices that have pressured Aramco’s revenue and prompted the company to seek alternative funding avenues.