Saudi Aramco raises $6B via Islamic ‘bonds’

The Saudi Arabian Oil Company (Aramco) has successfully raised $6 billion following the sale of US dollar-denominated Shariah-compliant securities to leading institutional investors, Report informs, referring to the company’s website.

The issuance comprised three tranches of senior unsecured Sukuk trust certificates issued under Aramco’s newly established International Sukuk Program, with the funds raised allocated for general corporate purposes.

The three tranches included $1,000,000,000 maturing in 2024, carrying a profit rate of 0.946 percent; $2,000,000,000 maturing in 2026, carrying a profit rate of 1.602 percent; $3,000,000,000 maturing in 2031, carrying a profit rate of 2.694 percent.

“We are very pleased with the global investment community’s response to Aramco’s first international dollar Sukuk, which attracted demand 20 times the initial targeted issuance size. The outcome demonstrates further evidence of Aramco’s unique value proposition, which is underwritten by its operational and financial resilience. This is of course made possible by our employees, who continue to make a difference by safely and reliably delivering energy to the world,” said Aramco President & CEO Amin Nasser.

Sukuk is the Islamic analog of bonds common in financial markets. Unlike traditional debt instruments, Sukuk yields are tied to an equity stake in a specific project or tangible asset.

Earlier, the company announced plans to expand production capacity by 1 million barrels per day to 13 million barrels per day. The project is now at the engineering design stage.

In 2019, Saudi Aramco placed almost 2 percent of its shares on the Saudi Stock Exchange Tadawul as part of an IPO and raised nearly $30 billion from their sale.