What stake size in Sabic would determine the bond amount and bank loans?

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The Size of the Stake in Sabic Would Determine the Bond and Loan Amounts

The specific percentage of Saudi Basic Industries Corp (Sabic) that Saudi Aramco acquires would be a determining factor in the potential size of any international bond issuance and associated bank loans. The preliminary plans for Aramco to tap the international bond market for the first time to finance its acquisition of Sabic are contingent on several factors, including the stake size and the willingness of banks to lend.
Potential Bond Issuance Size is Undetermined

Aramco has not yet engaged in discussions regarding the specific amount of a potential international bond sale. Such a figure would be directly influenced by the quantum of the stake Aramco ultimately purchases in Sabic. This approach allows Aramco to raise the necessary cash to pay Saudi Arabia's Public Investment Fund for its 70 per cent holding in Sabic, which is valued at approximately US$70 billion (RM284.7 billion).
Bank Lending Capacity is a Key Variable

Beyond the stake size, the amount that banks are prepared to lend directly will also shape the overall financing package. While the exact lending limits or typical loan-to-value ratios for such a transaction are not detailed, the inclusion of bank loans alongside a potential bond issuance suggests a blended financing strategy. This is similar to how other large corporate acquisitions have been financed, such as Verizon Communications Inc's US$49 billion bond issuance in 2013 or Anheuser-Busch InBev SA/NV's US$46 billion raise in 2016.
Bond Market Entry Offers an Alternative to IPO

The consideration of a global bond sale represents a significant potential shift for Saudi Aramco, offering an alternative route to raising capital compared to its previously planned initial public offering (IPO). This move into international capital markets would necessitate Aramco disclosing its financial accounts and operational details to investors for the first time in decades. The funds raised through bonds and loans would be directed to the Public Investment Fund, fulfilling its initial objective of raising capital from the Sabic stake, which was originally envisioned through the IPO.

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What stake size in Sabic would determine the bond amount and bank loans?

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