May 30, 2012 / 1:03 PM / in 8 years

Saudi Aramco seeks $12.5 billion in debt for Dow project: PFI

DUBAI (Reuters) - State-owned oil giant Saudi Aramco SDABO.UL is seeking to raise $12.5 billion in debt to help finance its joint venture with Dow Chemical (DOW.N), according to a report in Project Finance International (PFI), a unit of Thomson Reuters.

Saudi Aramco has sent an information memorandum to local and international banks detailing the $20 billion project with Dow Chemical. The project is due to be completed in 2016, and will produce more than 3 million metric tons a year of petrochemicals.

The multi-tranche, multi-tenor financing strategy will include an export credit agency (ECA) portion, a commercial bank tranche and a capital markets part, most likely a 144a issue, open to U. S. investors, or an Islamic bond.

The overall financing will mature after 16 years while the ECA portion will have a tenor of 17 years. The financing includes completion and construction guarantees from Aramco and Dow Chemical.

Banks have eight weeks to respond to the memorandum, with bids due after the Holy month of Ramadan which is expected this year to end in the third week of August.

A spokesman for Saudi Aramco declined to comment.

Indicative sizes for all the three tranches range from at least $5 billion from the ECA portion to about $2.8 billion from commercial bank lending potentially in both Saudi riyals and dollars, and about $1.4 billion from a bond deal.

Reporting by Rachna Uppal and Reem Shamseddine; Editing by Susan Fenton

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