Aramco Eyes Islamic Debt Market Amid Fiscal Pressures
Saudi Aramco has filed a new prospectus for an Islamic bond issuance programme, indicating a potential return to the debt markets following a $5 billion conventional bond sale earlier this week.
The prospectus, dated 30 May, was submitted to the London Stock Exchange, where the sukuk would be listed. Under its terms, Aramco has a year to issue the Islamic bonds. This move comes as the company navigates economic uncertainties and increased oil supply, which have impacted crude markets and reduced the oil exporter's profits.
In March, Aramco announced plans to reduce its dividend by nearly a third due to declining profits and free cash flow. The Saudi government relies heavily on revenue from Aramco, including dividends, royalties, and taxes. Last year, oil accounted for 62% of state revenue. The International Monetary Fund estimates that Saudi Arabia requires oil prices above $90 per barrel to balance its budget, while Brent crude is currently trading around $64.40.
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