Saudi Aramco extends $10 billion loan on improved terms
DUBAI - Saudi Arabian oil giant Aramco has secured a one-year extension to a $10 billion loan it raised last year, negotiating improved terms in the process.
Aramco has borrowed tens of billions of dollars in the past
few years to keep up with Saudi Arabia’s financing needs in an era of lower oil
prices.
This is in addition to a public sale of a minority stake in
the company and the recent leasing of some of its pipeline assets for $12.4
billion.
It has over the past few months renegotiated and extended a
$10 billion one-year loan it raised in May last year, three sources with direct
knowledge of the matter said.
The loan had a one-year extension option, but instead of
paying a higher interest rate to extend the deal - as agreed as part of that
facility - it has asked for better terms to reflect improved market conditions,
the sources said.
The pricing is tighter than the original loan’s due to a
“COVID premium” that resulted from depressed market conditions last year, one
of the sources said.
Two of the sources said the extended facility pays as much
as 30%-40% less than it would have paid under the original agreement.
“They are very good at negotiating,” another source said.
Aramco did not immediately respond to a request for comment.
Banks keep lending to Aramco and comply with what one banker
said were “aggressive” pricing requests partly because of the new business it
is expected to generate, two of the sources said.
Saudi Arabia’s Crown Prince Mohammed bin Salman said in April
that the kingdom was in discussions to sell a 1% Aramco stake to a global
energy company and could sell further shares within the next year or two,
including to international investors.
Aramco is also looking to replicate the oil pipeline deal by
selling a stake in its gas pipelines, sources have said.
The $12.4 billion pipeline deal was backed by nearly $11
billion in debt underwritten by eight banks and subsequently syndicated to an
additional 10 banks, two of the sources said.
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