Saudi Aramco, the world’s largest oil exporter, is working with JPMorgan Chase & Co., HSBC Holdings Plc and Riyad Bank on the company’s first sale of Islamic bonds, people with knowledge of the matter said.
The three banks will help the Saudi oil company set up a riyal-denominated sukuk program, with the first sale potentially taking place this year, the people said, asking not to be identified as the information is private. The size of the first sale hasn’t yet been determined and other banks could be appointed before it takes place, the people said. Aramco is also considering setting up a dollar-bond program, the people said.
Saudi Aramco is at the center of a plan to wean the country’s economy off its dependency on oil revenues. The government outlined plans to sell a less than 5 percent stake in Aramco to the public and transfer ownership of the rest of the company to the Public Investment Fund, transforming it into a $2 trillion sovereign wealth fund. Once completed, the move will mean that Saudi Arabia derives most of its revenue from investments, rather than oil sales, Deputy Crown Prince Mohammed bin Salman told Bloomberg in April.
The company started holding talks with banks about selling Islamic bonds earlier this year, people with knowledge of the matter told Bloomberg in February. HSBC, JPMorgan, Riyad Bank and Saudi Aramco declined to comment.
The closest Saudi Aramco has come in the past to selling debt is a 3.75 billion-riyal ($1 billion) sukuk issued by Saudi Aramco Total Refining & Petrochemical Co., a joint venture with France’s Total SA known as Satorp. In 2013, another Saudi Aramco joint venture, Sadara Chemical Co. with Dow Chemical Co., raised 7.5 billion riyals through a sukuk to finance a chemicals complex.