Aramco Seeks Cheap ECA backed loans prior to IPO

(Bloomberg, London, 9 January 2018) Saudi Arabian Oil Co. is seeking a $2 billion loan from Japan’s export-credit agency, three people with knowledge of the matter said, as competition for a role in potentially the world’s largest initial share offering heats up. A deal would make the Japanese export-credit agency the second state institution to extend financing to Aramco ahead of its planned initial public offering -- which the Saudi government has said may value the company at $2 trillion. The U.K. government agreed to a $2 billion loan guarantee for Aramco in November as it competed with the U.S. to host the IPO. The unusually large export-credit guarantee was designed to finance the purchase of British goods but opened the U.K. up to the suggestion that it was trying to influence the decision on where the company should be listed. Aramco also signed an agreement with a group of regional and international lenders for $10 billion of standby revolving-credit facilities in 2015. Mandates on the oil company’s IPO may be finalized as early as this week, with Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co., HSBC Holdings Plc and Morgan Stanley said to be among lenders vying for a place on the deal. According to Reuters, Saudi Aramco is working to secure billions of dollars in cheap ECA backed loans from banks before its stock listing and disclosure of its assets raises loan rates. Meanwhile, Abu Dhabi National Oil Co (ADNOC) plans to raise a $3 billion syndicated loan from JIBC, according to a source close to the matter. Such loans aim to help Japanese companies secure oil supplies from Abu Dhabi, as the proceeds are generally used as a form of advance payment to ADNOC for crude oil sales to Japanese oil firms.