Saudi Aramco may soon issue Islamic bonds as a prospectus suggests
Saudi Aramco published a prospectus for a programme to issue Islamic bonds, or sukuk. This indicates that the state oil giant may tap debt markets soon after raising $5 billion in a three-part sale of bonds this week.
The prospectus submitted to the London Stock Exchange, where the sukuk will be listed, dates May 30. Aramco is allowed to issue sukuk for a period of one year under the terms.
Aramco raised $5 billion earlier this week through the sale of conventional bonds. The borrower is Aramco, which has seen its profits eroded by economic uncertainty and increased supply on the crude market.
Aramco said in March that it expects to cut its dividend by almost a third this year as profits and cash flow are declining.
Saudi Arabia's government relies heavily on the generous payments it receives from Aramco - its cash cow of many years - which include taxes and royalties. Last year, oil receipts accounted for 62% of the state's revenue.
The government doesn't disclose the price of crude at which its books are in balance. IMF estimates that oil prices need to be over $90 per barrel in order for the budget to balance. Brent crude traded at $64.4 per barrel on Friday. Mohd. Edrees, Benglauru; Yousef. Saba, Dubai. Editing by Emelia S. Matarise and David Holmes.
(source: Reuters)
