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Sun 21 Feb 2010 02:03 PM

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Aramco, Total to sell bonds for $12bn refinery - report

Sukuk may be the biggest Islamic issue from the Gulf region this year at around $1bn.

Aramco, Total to sell bonds for $12bn refinery - report
NEW PLANS: Saudi Aramco and Total have reportedly hired banks to sell Islamic bonds to build a $12bn refinery.

Saudi Arabian Oil Co., the world’s biggest crude producer, and Total SA hired banks to sell Islamic bonds to help fund the construction of a $12bn oil refinery, said two bankers familiar with the transaction.

Saudi Arabian Oil, also known as Aramco, and Total, Europe’s largest refiner, appointed Deutsche Bank AG, Samba Financial Group and Calyon to manage the mainly domestic bond sale, said the bankers, who declined to be identified as the details are private. The lead managers will start investor meetings late next month or at the beginning of the second quarter, they said.

The size of the issue may be around $1bn, one banker said. The joint-venture is also discussing the possibility of issuing an international conventional bond after raising funds from the Islamic market as the companies seek to reduce dependence on short-term bank financing, he said.

The sukuk may be the biggest Islamic issue from the Gulf region this year. Saudi property developer Dar Al Arkan Real Estate Development Co. raised $450m earlier this month through a global sukuk sale. The Aramco-Total joint venture last month borrowed $6 billion through loans and plans to sign the loan agreement by the end of the first quarter, two bankers said on January 29.

The companies aim to start operations at the 400,000 barrels-a-day refinery in 2013 and plan to sell 25 percent of the venture to the public in a share sale.

A spokesman for Dhahran-based Aramco wasn’t immediately able to comment when contacted by Bloomberg today. A Total spokesman in Paris wasn’t able to respond when outside of business hours.

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