Aramco to sign $4bn loan on 23 November

02 November 2010

Dollar tranche is priced at just 13 basis points

Saudi Aramco is set to sign a $4bn loan deal on 23 November, according to bankers close to the deal.

The loan is split between a $1bn one-year loan with commitments in both Saudi riyals and dollars, and a $3bn three-year loan, which also has commitments in the two currencies.

The total committed to the loan by Saudi banks in riyals is $1.5bn, with the remaining $2.5bn coming from international lenders.

The dollar tranche pays a margin of just 13 basis points above the London interbank offered rate (Libor), and a $3bn three-year loan that pays 18 basis points above Libor. The riyal tranche is understood to be priced slightly lower than this.

The deal will refinance an existing loan, that sources say has never been drawn by Aramco.

One banker involved in the deal says, “Basically Aramco has been given this money for free, but the lenders take comfort from knowing the last facility has not been drawn and the group of banks involved in this deal will form the core relationship banks for Aramco.”

Islamic banks have not been included in the financing because Aramco decided to avoid the additional complexity of arranging an Islamic tranche.

The deal is being arranged by Aramco.

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