Saudi Aramco taps cheap credit opportunity before IPO

Saudi Arabian Oil Co. (Saudi Aramco), the world’s largest crude exporter, is working to secure billions of dollars in cheap loans from banks, Reuters reported citing unnamed sources.

Citigroup, Standard Chartered and Sumitomo Mitsui Banking Corporation were advising these transactions, which may raise at least $5-6 billion.

Those loans will offer low returns, may be less than 1 percent a year.

Saudi Aramco may seek to leverage its balance sheet before the share sale, as it may face higher costs since it is no longer a solely state-owned entity.

The sources told Reuters said it was difficult to define Aramco’s needs due to its extensive spending plans and because the loans would finance new and existing contracts altogether.

Aramco has already obtained a $2 billion loan from the UK Export Finance agency (UKEF).

It was now looking at deals which could involve the South Korean and Japanese ECAs, and at least one more deal that could involve a European ECA, the sources said.

Each of these new loans was likely to be in the range of $2 billion dollars, the sources added.