Business

Aramco to Issue Bonds in 2024

Emphasis on Long-Term Bonds

Ziad Al-Mudhaf, the Chief Financial Officer of Saudi Aramco, revealed on Monday the company’s intention to likely issue bonds within the year 2024.

Emphasis on Long-Term Bonds

During the Saudi Financial Market Forum in Riyadh, Al-Mudhaf underscored the importance of prioritizing longer-term bonds, potentially stretching up to 50 years. The proposed bond issuance aligns with Aramco’s strategic objectives aimed at enhancing its capital structure for overall improvement.

Previous Market Engagement

Aramco’s last engagement with the global debt markets occurred in 2021 when it raised $6 billion through sukuk sales distributed across three tranches. Al-Mudhaf refrained from addressing rumors surrounding potential government stock sales, indicating such decisions lie beyond the company’s control.

Saudi Arabia’s Economic Diversification Initiative

Saudi Arabia is intensifying efforts to diversify its economy by advancing Aramco stock sales, aiming to bolster national finances and diminish dependency on oil revenues. Moreover, this strategic move aligns with the Kingdom’s long-term vision for economic sustainability.

Potential Financial Boost

According to Bloomberg reports, the upcoming stock sales could potentially inject around $20 billion into Aramco’s financial reserves, although official confirmation from the company is awaited. Additionally, this infusion of capital would provide significant resources for further investment and development initiatives, fostering economic growth and resilience.

Monumental IPO Achievement

Aramco achieved a historic milestone in late 2019 with its record-breaking Initial Public Offering (IPO). Initially raising an unprecedented $25.6 billion, the company later expanded the total amount to $29.4 billion. This landmark event underscores Aramco’s significance in the global economy and its pivotal role in Saudi Arabia’s economic diversification journey.

Adapting to Oil Price Fluctuations

Despite oil prices surpassing $60 per barrel, substantially above operational costs, Aramco remains flexible to varying price ranges. Aramco aims to unveil its 2023 financial results alongside profit distributions on March 11, 2024, offering insight into its recent performance.

Profit Decrease in 2023

In the third quarter of 2023, Aramco witnessed a 23.2% decrease in net profit, amounting to approximately SAR 122.19 billion, after zakat and taxes, compared to SAR 159.12 billion in Q3 2022.

Performance Overview for Nine Months

In conclusion, for the initial nine months of 2023, Aramco’s net profit saw a significant decline of 27.46%, reaching approximately SAR 354.5 billion. Zakat and taxes, in contrast reached SAR 488.78 billion during the same period in 2022.

 

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