Arab News, Sunday, Jan 16, 2022 | Jamada Al-Aakhirah 13, 1443
Aramco Oil Pipelines investors miss funding goal with $2.5bn bond sale
Saudi Arabia:
A group of institutional investors that last year
took a stake in Saudi Aramco's oil pipelines network sold $2.5 billion in
dual-tranche amortising bonds on Thursday, significantly below the amount
sought, a bank document showed, according to Reuters.
Amid turbulent debt markets, final spreads were
unchanged from initial guidance, with the deal drawing around $5 billion in
orders, according to the document.
A separate bank document had shown that the
investors, via EIG Pearl Holdings, were seeking to raise $3.5-4.4 billion.
“Investment grade deals are getting difficult in
light of market conditions,” a banker away from the deal said.
“Even the Coca Cola bond deal struggled,” he
added, referring to Coca-Cola Icecek, the soft drink's Turkish bottler, which
sold $500 million in sustainability-linked bonds on Thursday, according to fixed
income news service IFR.
Global debt markets have been rattled by the US
Federal Reserve's indications of a faster run of interest rate hikes and
stimulus withdrawal, with the resulting rise in borrowing costs leaving
investors more reluctant to lend to companies until the picture is clearer.
EIG Pearl Holdings sold $1.25 billion in a tranche
maturing in 14-1/2 to 15 years at 185 basis points over US Treasuries and $1.25
billion in paper maturing in 24-1/2 to 25 years at 235 bps over USTs.
The tranches are expected to have a weighted
average life of 10.2 to 10.7 years and between 23-1/2 and 24 years,
respectively. Final maturities and the amortisation schedule are expected later
on Thursday, the document said.
In June, a consortium led by US-based EIG Global
Energy Partners bought 49 percent of the Aramco Oil Pipelines Company from Saudi
Aramco, which retains a 51 percent stake.
As part of the deal, Aramco agreed a 25-year lease
and leaseback arrangement with the pipelines group.
The bonds are being issued through EIG Pearl
Holdings, in which investors led by EIG control an 89.45 percent stake, with the
remainder held by Abu Dhabi 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 partly refinance a $10.8 billion
loan that backed the pipelines deal. Sources said previously that the loan would
be refinanced across two or three bond deals and that the first bond issue would
likely raise around $4 billion.
Citi and JPMorgan are coordinating the deal, which
involves 17 other banks.