Saudi Aramco is in early talks with banks to borrow about $10 billion to help the world’s biggest crude oil producer fund its acquisition of a 70% stake in Saudi Basic Industries Corp (SABIC), Reuters reported, citing three banking sources familiar with the matter.
In 2019, Aramco agreed to acquire a 70% stake in SABIC from Saudi Arabia’s Public Investment Fund (PIF) in a deal worth $69.1 billion, making it one of the biggest-ever deals in the world’s chemical industry. One of the sources said the talks are still in the initial stage. Meanwhile, another source said that HSBC and JP Morgan are among the potential lenders.
The discussion came as oil prices took a massive hit from a collapse in demand due to the coronavirus pandemic. OPEC+ and other oil producers have agreed to slash supply by around 20 million bpd, but the deal seems to fail to boost prices, with US WTI crude futures slumping below zero on Monday.
Aramco’s shares fell to $31.10 last week, below the IPO price of $32 in late 2019. Saudi Arabia will reportedly issue new international bonds soon as the supply reduction deal squeezes the kingdom’s revenues further.
