Bankers said to weigh ‘jumbo’ Aramco-SABIC debt financing deal

Saudi Aramco, the world's largest oil producer, may require financing of up to $70 billion to complete the potential acquisition of a majority stake in petrochemical giant Saudi Basic Industries Corp. (SABIC), Reuters reported, citing banking sources.

"Bankers are having internal discussions about Aramco’s potential need for external debt financing, which could be loans or bonds," an unnamed source told the news agency.

Aramco has not yet sent a request for proposals to its lenders, it added.

JP Morgan and Morgan Stanley have been picked to advise on the deal.

Aramco is aiming to buy a controlling stake in SABIC and may possibly buy the entire 70 percent stake owned by the Public Investment Fund (PIF), the Kingdom's sovereign wealth fund.

SABIC, the world’s fourth-biggest petrochemicals company, has a market capitalization of SAR 385.2 billion ($103 billion) on Tadawul.

The 70 percent stake would cost $70 billion.

“Aramco may need to raise some upfront cash which might be paid in a number of agreed instalments and might include a bridge loan,” a banker said.

“The US investment banks, all three Japanese banks, all the French banks, some of the German banks and a lot of Middle East banks, including the Saudi banks, will be willing to lend as much as possible,” another source added.