Aramco seeks one-year extension on $10 billion loan: sources
Aramco seeks one-year extension on $10 billion loan: sources
Aramco asks banks to extend by a year a $10 billion loan it raised last May, suggesting that rebounding crude prices are not pushing the oil giant to reduce debt.
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Aramco's profits fell with the fall in demand, as a result of the coronavirus [Getty]
has requested a one year extension to a $10 billion loan it secured last May, Reuters reported on Sunday, citing two sources.
The request for an extension is an indication that the recent rise in is not enough to pull the out of debt.
While the bank may choose to reject Aramco's request, it is likely to agree in order to maintain a good relationship with the oil giant in , according to a report by Loan Pricing Corporation.
Aramco have not commented on the loan extension request.
According to a banker who spoke to Loan Pricing Corporation, Aramco would seek to alter the terms of the deal, due to the fact that oil prices had not improved as expected with the start of coronavirus vaccine rollouts around the world.
Last week, the price of a barrel of Brent crude was $66.13, up from the worrying lows of May 2020, when a barrel was valued at $30, as the world went into lockdown and .
The loan was to be used by Aramco to back its purchase of a 70% stake in Saudi Basic Industries Corp (SABIC) from Saudi Arabia’s Public Investment Fund, a deal worth almost $70 billion, according to sources who spoke to Reuters.
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It was their intention that the loan would be repaid using funds raised from the sale of bonds, by the fourth quarter of 2020. This sale never happened, however Aramco was able to raise $8 billion in a multi-tranche bond deal in November.
The coronavirus pandemic caused Aramco’s profits to plunge last year, but it is expected that 2021 will see higher profits and a fall in debt held by the oil company.
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