BlackRock-led Investors In Aramco Pipelines Target Around $4 Billion In Bond Sale

BlackRock Inc-led investors in Saudi Aramco's gas pipeline network are looking to raise around $4 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 refinance the $13.4-billion bridge loan. 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. The sukuk will have a tenor of about 10 years and a weighted average life (WAL)of roughly 7-1/2 years.

The guidance for the sukuk was tightened 30 basis points (bps) to around 210 bps over U.S. Treasuries after demand topped $16 billion for the three tranches, skewed towards the sukuk.

The conventional bonds will have a tenor of about 15 years and a WAL of around 12 years. Its guidance was tightened by 20 bps to around 255 bps over U.S. Treasuries.

Formosa bonds maturing in 19 years with a WAL of roughly 18 years were tightened by 20 bps to 285 bps.

Formosa bonds are sold in Taiwan by foreign borrowers and are denominated in currencies other than the Taiwanese dollar.

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.

A similar deal 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.

BNP Paribas, HSBC and JPMorgan are global coordinators on the GreenSaif debt sale. Other banks on the deal are 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%.