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Bonds to refinance loan that backed stake in gas pipelines
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$1.5 bln per tranche issue expected to be first of several
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Similar deal missed funding target in early 2022
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Sukuk tranche about 120 bps above Aramco 2030s current
level
(Updates with final size, launch, demand)
By Yousef Saba
DUBAI, Feb 9 (Reuters) - BlackRock Inc-led investors in
Saudi Aramco's gas pipeline network are set to raise $4.5
billion from a sale of bonds to refinance a multi-billion dollar
loan that backed their stake purchase, a bank document showed on
Thursday.
The investors, including Saudi-backed Hassana Investment
Co., had in 2021 taken a 49% stake in Aramco Gas Pipelines Co in
a $15.5 billion lease-and-leaseback agreement.
They are now issuing amortising bonds and sukuk, or Islamic bonds, to begin refinancing the $13.4 billion bridge loan that backed the deal. BlackRock had last year held investor meetings in London to drum up interest in the planned bond sale, Reuters reported in September. The debt sale is expected to be the first of several. Credit rating agency Moody's said it expected the issuer to raise around $11 billion with bonds and sukuk. A similar deal in 2021 saw Aramco agree to sell a 49% stake in its oil pipelines network to a consortium led by U.S.-based EIG Global Energy Partners for $12.4 billion. The EIG-led investors in Aramco Oil Pipelines Co sold bonds in January 2022 to begin refinancing the $10.8 billion loan that backed the deal. They raised $2.5 billion, falling short of a self-set target of $3.5-4.4 billion. The sukuk will have a tenor of about 10 years and a weighted average life (WAL) of roughly 7-1/2 years, a conventional tranche will have a tenor of about 15 years and a WAL of around 12.3 years, and Formosa dual-listed paper will mature in around 19 years with a WAL of roughly 17.8 years. Demand topped $20 billion for the three tranches, with an earlier update showing $16 billion in orders skewed towards the sukuk.
The sukuk launched at 200 basis points (bps) over seven-year U.S. Treasuries (UST), the conventional at 245 bps over 10-year UST and the Formosa at 275 bps over 30-year UST. The tranches were tightened 40, 30 and 40 bps from initial guidance, respectively.
The sukuk's spread placed it about 120 basis points
above where Aramco bonds maturing in October 2030 are now
trading, according to Reuters calculations and Tradeweb data.
Moody's gave the issuers - GreenSaif Pipelines Bidco S.a.r.l. for the bonds and TMS Issuer S.a.r.l. for the sukuk - an expected rating of A1. Fitch Ratings assigned them an expected rating of A. BNP Paribas, HSBC and JPMorgan are global coordinators on the GreenSaif debt sale. Other banks on the deal include Citi, First Abu Dhabi Bank, MUFG and SMBC Nikko. BlackRock Inc. and its affiliates indirectly own 78.7% of the issuer through "an aggregator vehicle", a separate bank document showed.
Hassana, the investment arm of Saudi Arabia's General Organization of Social Insurance, owns the remaining 21.3%. (Reporting by Yousef Saba in Dubai and Yoruk Bahceli in Amsterdam; editing by Jason Neely, Bernadette Baum and Arun Koyyur)
