Saudi Aramco has confirmed the signing of $10bn credit facilities, which will replace its existing $4bn loan due to mature later this year.
The new revolving credit agreement will act as a stand-by loan, meaning the company will only withdraw the money when it needs it.
Divided into two parts, the cash will be available in US dollars and Saudi riyals.
The first part covers $7bn, of which $6bn is a 5-year facility with two one-year extension options and another $1bn 364-day facility, which can be renewed annually.
The second portion includes $3bn Shariah compliant loans: $2bn 5-year facility with two one-year extension options and another $1bn annually-renewable 364-day facility.
The loan was backed by more than 29 foreign and local banks including Bank of China’s London branch, Citi Bank, Deutsche Bank, HSBC Bank Middle East, JPMorgan Chase Bank’s Riyadh branch, and others.
Saudi Aramco said in a statement that the terms of the new afreement reflect its “strong credit standing” and highlighted “the banking community’s continuing confidence in Saudi Aramco and Saudi Arabia”.
Banks in talks for the deal have been told that “unlike the previous loan which remained untapped, this could be used in coming months”, Reuters reported earlier in March.
A potential use for the loan will be to fund an acquisition of a stake in Germany’s chemical company Lanxess, which has a market value of $4.7bn. For the deal, Aramco is competing with Russia’s NKNK, Reuters reported in February.
“Aramco has been seeking to make inroads into more advanced chemicals to diversify away from its oil and basic petrochemicals businesses, and Chief Executive Khalid al-Falih told a conference in Riyadh last month that it was “even more committed today to diversifying and investing in new sectors” despite the impact of oil price declines,” it added.
