Saudi Aramco's board will reportedly meet this week to approve the issuance of a bond which could help the company finance its planned acquisition of a controlling stake in Sabic, according to a report by Reuters, which cited anonymous industry sources. The bond is expected to be issued in the second quarter of 2019.
Saudi Aramco Chairman and Saudi Energy Minister Khalid al-Falih said in January 2019 that the company could issue a $10bn bond to fund the Sabic deal. Reuters reports that Aramco has already picked a group of banks to arrange the bonds, with Saudi Arabia's National Commercial Bank, HSBC, Goldman Sachs, JPMorgan, Morgan Stanley and Citi among them.
In January 2019, al-Falih told Reuters that "the bond issue is intended to give Aramco multiple sources of capital," but that even without the deal, with Saudi Aramco's "capital program and its capital spend going to be from $40bn to $50bn a year-- it's very prudent they have access to the capital market."
The deal would see Saudi Aramco purchase a 70% stake in Sabic from the Public Investment Fund, allowing it more liquidity while strengthening Saudi Aramco's downstream portfolio; a key strategy for the company.
“Our downstream business ventures will provide a reliable destination for Saudi Aramco’s future oil production, and diversify both the company’s business portfolio and the Kingdom’s economy,” Saudi Aramco CEO Amin Nasser said in his keynote address at the Gulf Petrochemicals and Chemicals Association (GPCA) Forum in November 2018.
He told Bloomberg in November 2018 that the company has $100bn earmarked for downstream developments in the coming 10 years, and $160bn for natural gas, and important feedstock for the downstream segment.
Saudi Aramco had to pause its planned stock market listing due to the Sabic acquisition, and expects the listing to go through by 2021.