A group of institutional investors that last year took a stake in Saudi Aramco's oil pipelines network is expected to raise between $3.5 billion and $4.4 billion via a sale of dual-tranche amortizing bonds, a bank document showed.
Initial price guidance was around 185 basis points (bps) over U.S. Treasuries (UST) for a tranche maturing in 14-1/2 to 15 years, and around 235 bps over UST for paper maturing in 24-1/2 to 25 years, the document from one of the banks on the deal showed.
The tranches will have a weighted average life of 10.2 to 10.7 years and between 23-1/2 and 24 years, respectively.
In June, a consortium led by U.S.-based EIG Global Energy Partners bought 49% of the Aramco Oil Pipelines Company from Saudi Aramco, which retains a 51% stake.
As part of the deal, Aramco agreed a 25-year lease and leaseback arrangement with the pipelines group.
The bonds are being issued through EIG Pearl Holdings, in which investors led by EIG control an 89.45% stake, with the remainder held by Abu Dhabi sovereign wealth fund Mubadala Investment Company.
The EIG-led group includes China's state-owned Silk Road Fund, Saudi Arabia's Hassana, the investment arm of the kingdom's largest pension fund, and Korea's Samsung Asset Management.
The bonds will partly refinance a $10.8 billion loan that backed the pipelines deal. Sources have said the loan would be refinanced across two or three bond deals, with this first bond issue likely to raise at least $4 billion.
Citi and JPMorgan are coordinating the deal, which involves 17 other banks.