Aramco Approaches $10 Billion Revolving Loan from Global Banks
Aramco is close to signing a revolving credit facility of around $10 billion with US, British, Chinese, and Japanese banks, according to Bloomberg, which may be priced at 60 basis points over SOFR.
Bloomberg reported that Saudi Aramco is close to securing a loan of around $10 billion from a large group of international banks, with the agreement expected to be signed in the coming weeks. It added that talks with US, British, Chinese, and Japanese banks have reached their final stages.
The agency stated that the prospective banks include US-based JPMorgan and Citigroup, British HSBC, Bank of China, Industrial and Commercial Bank of China, and Japan's Mitsubishi UFJ. Sources said the interest rate could be around 60 basis points over SOFR, while Aramco and some banks declined to comment, and the agency did not receive an immediate response from the Chinese banks.
The requested facility is revolving, allowing Aramco to draw down up to a specified limit as needed rather than using the full amount at once. The company had arranged a $10 billion revolving facility in 2024, securing $7 billion from international banks and $3 billion from regional banks through Islamic Murabaha financing, and it remains unclear whether the new agreement will replace the old one or add new financing capacity.
The financing comes amid military tensions in the Middle East and threats of attacks on Saudi oil facilities and shipping lanes, raising transport costs and export risks. Aramco plays a central role in Saudi Arabia's revenues and global energy markets, and the loan provides additional flexibility for quick access to liquidity, noting that undrawn amounts from a revolving facility do not necessarily become outstanding debt.
What do these terms mean?
Revolving Credit Facility (RCF): A line of credit from which a company can draw down, repay, and draw again during the term of the agreement, rather than a single-disbursement loan.
SOFR: A benchmark interest rate for US dollar financing based on US repo market rates; international loans are typically priced by adding a margin to it.
Murabaha: An Islamic financing structure in which the bank purchases an asset and sells it to the customer at a known profit margin paid in installments.
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