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Aramco and Total to Issue Sukuk

Saudi Arabia : 21 February 2010

The world’s largest crude producer, Saudi Arabian Oil Co., also known as Aramco and Total SA, Europe’s largest refiner, engaged banks to sell Islamic bonds to finance the construction of a $12 billion oil refinery, two bankers known with the deal said.

Calyon, Deutsche Bank AG, and Samba Financial Group have been chosen by Aramco and Total to administer the chiefly domestic bond sale. The lead managers will initiate investor parleys late next month or at the start of the second quarter.

The magnitude of the issue may be about $1 billion. The joint-venture is also exploring the possibility of issuing an international conventional bond following raising finances from the Islamic market as the companies search for reducing reliance on short-term bank funding.

The sukuk may be the largest Islamic issue in the current year from the Gulf area. Saudi property developer Dar Al Arkan Real Estate Development Co. raised $450 million this month by selling an international sukuk. The Total-Aramco joint venture borrowed $6 billion through loans and eyes to endorse the loan agreement by the end of the first quarter, two bankers said.

The companies intend to commence operations at the 400,000 barrels-a-day refinery in 2013 and schedule to sell one fourth of the venture through open offer of shares to the public.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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