Aramco is helping to diversify the Saudi economy beyond oil, developing a $5.3bn ship repair and shipbuilding complex
National oil giant Saudi Aramco is preparing to make its first domestic issue of Islamic bonds later this year to help fund its activities, banking sources said on Monday.
The sources, who declined to be named because the matter was not public, said it was not yet clear how large the riyal-denominated issue would be. A spokesman for Aramco could not be contacted for comment late on Monday.
Early last year, Aramco's board approved the creation of a programme to issue sukuk, according to the company's official magazine, Arabian Sun.
When oil prices were high, major Saudi government institutions tended to finance their spending with oil earnings, but low oil prices have pushed the government and state entities to turn to the debt markets.
In addition to its energy projects, Aramco is helping to diversify the Saudi economy beyond oil and, with other companies, is developing a huge ship repair and shipbuilding complex at Ras al-Khair on the east coast. Officials have said that project will cost over 20 billion riyals ($5.3 billion).
Aramco, which is preparing for a public offer of up to 5 percent of its shares next year, may eventually also issue international bonds denominated in U.S. dollars, bankers say, but a firm plan for that has not been set.