Moody's assigns (P)A1 rating to Saudi Aramco's new sukuk programme

Certificate holders will be exposed to oil company's senior unsecured credit risk, the global ratings agency said

  
Investors monitor a screen displaying stock information at the Saudi Stock Exchange (Tadawul) following the debut of Saudi Aramco's initial public offering (IPO) on the Riyadh's stock market, in Riyadh, Saudi Arabia, December 11, 2019.

Investors monitor a screen displaying stock information at the Saudi Stock Exchange (Tadawul) following the debut of Saudi Aramco's initial public offering (IPO) on the Riyadh's stock market, in Riyadh, Saudi Arabia, December 11, 2019.

REUTERS/Ahmed Yosri

Moody's Investors Service has assigned a (P)A1 rating to Saudi Aramco’s new trust certificate issuance programme, reflecting the view that certificate holders will effectively be exposed to the oil company’s senior unsecured credit risk.

The sukuk programme was established under SA Global Sukuk Ltd., a special purpose company incorporated in the Cayman Islands. SA Global Sukuk Limited has been assigned a negative outlook in line with the negative outlook on existing ratings of Saudi Aramco, the ratings agency said.

All other ratings for Saudi Aramco are unchanged, including its A1 long-term issuer rating, its Aaa.sa long-term issuer national scale rating, its (P)A1 Global Medium Term Note (GMTN) programme rating and A1 ratings on existing senior unsecured bond issuances.

The exposure to senior unsecured credit risk is because certificate holders  only have rights against Saudi Aramco under the transaction documents, and these rights rank alongside other senior unsecured obligations of the company. Moreover, they are not exposed to the performance risk of the asset portfolio relating to the certificates; and will not have any preferential claim or recourse over the relevant trust assets.

Moody’s said interlinkages between Saudi Arabia and the company imply that any change in rating outlook on the government of Saudi Arabia would be mirrored on Saudi Aramco's rating outlook. “The change in sovereign outlook to negative on 1 May 2020 therefore resulted in a negative outlook for Saudi
Aramco.”

On Monday, the oil major was reported to have hired banks for its first ever dollar-denominated Islamic bonds, which it may offer in three tranches of notes.

(Writing by Brinda Darasha; editing by Seban Scaria)

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