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Saudi Aramco Issues $5 Billion Bonds Amid Oil Volatility

Oil and Gas

Business Honor
30 May, 2025

Saudi Aramco raises $5 billion in bonds to support growth amid ongoing challenges from lower oil prices.

Saudi Aramco is seeking to bolster its capital structure and fund its expansion plans by issuing more debt. The oil giant recently raised $5 billion through a bond issuance, bringing its total bond sales to $14 billion over the past year. This action was taken because the company's earnings and free cash flow have been negatively impacted by declining crude prices.

The recent issue comes after a $9 billion 2023 bond issue and as the weaker oil prices have persisted in impacting Aramco's bottom line. The company recorded a 4.6% decline year on year in first-quarter net income, with its free cash flow decreasing by 16% to $19.2 billion—still shy of its $21.36 billion dividend payout. In spite of such mishaps, the utilize of Aramco is still relatively modest compared to its industry peers in the industry, with a gearing ratio of 5.3% as of March 2025, which is higher than 4.5% of the last quarter of 2024. This is much less than the average gearing ratio of 14% for larger global oil multinationals like Shell and Total Energies.

Amin Nasser, Aramco's CEO, highlighted the financial health of the company, where its gearing ratio is among the lowest in the sector. He said Aramco will continue to tap the bond market in the future to fund its growth and preserve financial flexibility.

Aramco's latest sale of bonds was divided into three tranches, one of which was a $2.25 billion 30-year note with a yield 1.55 percentage points over U.S. Treasuries. In defiance of volatility in global oil prices, Brent crude having shed almost 12% since April, Aramco is sanguine, attributing high growth in demand and its low cost of production of only $3 per barrel as positives in its business model.

The firm is optimistic that oil demand will keep increasing, underpinning its long-term forecast regardless of continued market volatility.