Saudi Aramco prepares to raise $5 billion from global capital markets to fund its $75 billion dividends, according to Bloomberg. The company has picked about 15 banks to manage sales of Islamic debt as soon as this month.
The bond issue happens even as other Persian Gulf companies consider Eurobond sales, with Qatar Petroleum said to explore as much as $10 billion.
Aramco is said to consider the sale of dollar and local-currency sukuk to raise the funds. It has also seen its profits soar in the first quarter but has faced free cash flow challenges to cover its dividend commitments.
The Saudi government, the main dividend beneficiary of Aramco, is considering narrowing its budget deficit which ballooned to 12% of GDP.
Aramco cut spending, reduced jobs, and sold some non-core assets following the crude oil crash at the height of the coronavirus.
The oil giant’s debt grew following a $69 billion pre-pandemic acquisition of Saudi Basic Industries Corp., as the gearing ratio rose to 23% in March 2020 from -5% at the start of the year.
Aramco stock is currently closed for trading.
