Aramco Oil Pipelines investors set to raise $3.5-4.4 billion via bonds

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A view shows branded oil tanks at the Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019. REUTERS/Maxim Shemetov//File Photo

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DUBAI, Jan 13 (Reuters) – A group of institutional investors that took a stake in Saudi Aramco’s oil pipeline network last year are expected to raise between $3.5 billion and $4.4 billion through the sale of bonds redeemable in two tranches on Thursday, according to a bank document shown.

Initial price direction was around 185 basis points (bps) above US Treasuries (UST) for a 14-1/2 to 15-year maturity tranche, and around 235 bps at above the UST for paper maturing from 24-1/2 to 25 years, the document from one of the banks on the deal showed.

The tranches will have a weighted average life of 10.2 to 10.7 years and between 23-1/2 and 24 years, respectively.

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In June, a consortium led by US firm EIG Global Energy Partners bought 49% of Aramco Oil Pipelines from Saudi Aramco (2222.SE), which retains a 51% stake.

As part of the deal, Aramco entered into a 25-year leaseback and leaseback agreement with the pipeline group.

The bonds are issued through EIG Pearl Holdings, in which investors led by EIG control an 89.45% stake, with the remainder held by Abu Dhabi’s sovereign wealth fund Mubadala Investment Company.

The EIG-led group includes China’s state-owned Silk Road Fund, Saudi Arabia’s Hassana, the investment arm of the kingdom’s largest pension fund, and Korea’s Samsung Asset Management.

The bonds will partially refinance a $10.8 billion loan that backed the pipeline deal. Sources said the loan would be refinanced over two or three bond transactions, with this first bond issue likely to raise at least $4 billion.

Citi (CN) and JPMorgan (JPM.N) are coordinating the deal, which involves 17 other banks. Read more

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Reporting by Yousef Saba; edited by David Evans and Simon Cameron-Moore

Our standards: The Thomson Reuters Trust Principles.

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