Saudi Aramco taps global debt markets with $4 billion bond issue

• The bond sale drew orders exceeding $21 billion, enabling Aramco to tighten spreads substantially - the 3-year tranche priced at 60 bps over Treasuries versus initial guidance of 100 bps
• Aramco's 2025 total dividends are expected to drop roughly 30% to about $85.4 billion as the company implements cost-cutting measures and asset divestitures in response to lower crude prices
• The Saudi government owns 81.5% of Aramco directly with sovereign wealth fund PIF controlling another 16%, making the company's financial health critical to state revenues

Saudi Aramco Raises $4 Billion in Oversubscribed Bond Offering

Key Transaction Details:

Saudi Aramco, the world's largest oil company, successfully issued $4 billion in bonds across four tranches on January 27, marking its first debt market entry in 2025. The offering comprised $500 million (3-year), $1.5 billion (5-year), $1.25 billion (10-year), and $750 million (30-year) maturities.

Strong Investor Demand:

Orders exceeded $21 billion, demonstrating robust appetite for Aramco debt. This oversubscription enabled significant spread tightening: the 3-year tranche priced at 60 bps over U.S. Treasuries versus initial guidance of 100 bps; 5-year at 80 bps (from 115 bps); 10-year at 95 bps (from 125 bps); and 30-year at 130 bps (from 165 bps).

Recent Fundraising Activity:

This follows Aramco's September 2024 sukuk sale of $3 billion and May 2024 bond issuance of $5 billion. The company returned to debt markets in July 2024 after a three-year hiatus, raising $6 billion.

Financial Context:

Aramco faces pressure from falling crude prices and rising debt, prompting company-wide cost cuts and asset divestments, including planned gas plant sales. Total dividends for 2025 are expected at $85.4 billion, down approximately 30% from 2024 due to reduced free cash flow.

Ownership Structure:

The Saudi government owns 81.5% directly, with sovereign wealth fund PIF controlling 16%.

Alternative Funding:

In 2024, Aramco secured an $11 billion lease-leaseback deal for Jafurah gas facilities with a BlackRock-led consortium and raised $12.35 billion through a 0.64% stake sale.

Major investment banks including Citi, Goldman Sachs, HSBC, JPMorgan, and Morgan Stanley