Aurelia Butler

Aramco hired banks to sell bonds maturing in 10, 30 and 40 years, a document from one of the banks working on the deal showed. Aramco is likely to raise at least $3 billion across the three tranches, a source with knowledge of the matter said.The company did not immediately respond to a request for comment.”The timing suggests Aramco is taking advantage of the last window ahead of the summer illiquidity,” Zeina Rizk, co-head of fixed income at Amwal Capital Partners told Reuters.Gulf companies and governments have raise funds in debt markets this year to take advantage of favourable market conditions, with top oil exporter Saudi Arabia issuing $12 billion of dollar-denominated bonds in January and $5 billion in sukuk, or Islamic bonds, in May.Aramco, which last tapped global debt markets in 2021 when it raised $6 billion from three-tranche sukuk, flagged in February it was likely to issue bonds this year. Aramco has long been a cash cow for the Saudi state, fuelling decades of prosperity. It expects to declare $124.3 billion in dividends for 2024, the majority of which goes to the Saudi government.Last month, the oil giant awarded $25 billion worth of contracts for its gas expansion plans, said it would buy 10% of Renault (EPA:RENA) and Geely’s thermal engines joint venture Horse Powertrain and announced a non-binding deal with U.S. energy firm Sempra to buy liquefied natural gas.Aramco’s bond sale is “likely an indication the company will continue to pursue acquisitions aggressively”, said Yousef Husseini, an analyst at EFG Hermes.A portion of Aramco’s dividends also go to the Public Investment Fund – the kingdom’s sovereign wealth fund steering its goal of weaning the economy off oil – which owns 16%. The government, which directly owns about 81.5% of Aramco, raised $11.2 billion by selling a slice of shares in its crown jewel last month. Proceeds could boost the country’s funding and its aim of shifting the economy away from oil under a plan called “Vision 2030”.PIF, which has spent billions on everything from electric cars to sports and planned futuristic cities in the desert, has also raised almost $8 billion from three debt sales. “As Saudi Arabia’s funding needs for its investment programme remain significant in the medium-term despite some timelines being extended, and in the absence of hoped-for levels of FDI, tapping the debt markets reduces pressure on domestic funding and liquidity,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.Citi, Goldman Sachs International, HSBC, JPMorgan Chase (NYSE:JPM), Morgan Stanley and SNB Capital have been appointed as joint active bookrunners for the three-part bond sale. The banks will arrange investor calls on Tuesday for the potential sale of benchmark-sized notes, according to the document, which did not disclose the size of the issuance.Abu Dhabi Commercial Bank, BofA Securities, the Bank of China, Emirates NBD, First Abu Dhabi Bank, GIB Capital and Mizuho are among the bank that are acting as joint passive bookrunners. Aramco’s 40-year tranche would become its second-longest dated bonds after $2.25 billion of notes due in November 2070.($1 = 0.7805 pounds) More

LONDON (Reuters) – Board directors of banks must take ultimate responsibility for outsourced services and document how they manage the risk of outages and disruptions to customer services, the global Basel Committee of banking regulators proposed on Tuesday.Banks increasingly use third-party tech companies, such as Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL), for cloud computing to run key services, raising concerns among regulators about the impact on the financial sector if a provider used by many banks went down.”Ongoing digitalisation has led to rapid adoption of innovative approaches in the banking sector,” the Basel Committee said in a statement.”As a result, banks have become increasingly reliant on third parties for services that they had not previously undertaken.” The committee, made up of regulators from the G20 and other countries, proposed 12 principles for banks and their regulators to apply, noting that the bank’s board of directors has ultimate responsibility for oversight of third-party arrangements.”As with all business processes, documentation evidencing key decisions (e.g. third-party strategy, board minutes reflecting decision to enter into a critical… arrangement) should be maintained in banks’ records,” Basel said in its consultation paper.Third-party services have come under increased scrutiny as hackers continually try to breach banks’ cyber defences and undermine operational resilience, leading to suspension of customer services for hours or even days.The European Union has approved a Digital Operational Resilience Act (DORA) to improve resilience in the financial sector from January next year, with Britain doing likewise.Basel said banks should undertake “appropriate due diligence” of risks before they sign contracts with third parties, and monitor how the service is performing.Banks should also maintain “robust business continuity” management so they can operate during a disruption, Basel said. More

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BENGALURU (Reuters) – India consumer price inflation probably edged up in June, snapping five months of declines, largely because of a jump in vegetable prices caused by the damage to crops wrought by extreme weather, according to a Reuters poll of economists.Prices of tomatoes, onions, and potatoes – staples in every Indian kitchen – surged by double digits last month as extreme heat and heavy floods in India’s northern states disrupted agricultural production.The July 5-9 Reuters poll of 54 economists forecast consumer price inflation rose to 4.80% last month on a year earlier, up from 4.75% in May. Food accounts for around half the overall CPI basket.Forecasts for the data, due on July 12 at 1200 GMT, ranged from 4.10% to 5.19%.”A sharp spike in vegetable prices along with cereals and pulses kept food inflation at higher levels and nullified the softness in eggs, fruits, and spices prices,” said Kanika Pasricha, chief economic advisor at Union Bank of India.”Core inflation likely stayed flat at all-time lows of 3.10% as gold prices eased somewhat during the month and commodity prices also remained under pressure.”Core inflation, which excludes volatile items, such as food and energy and is seen as a better gauge of domestic demand, was forecast to be 3.10% in June, according to the median estimate from a smaller sample of 19 economists.The Indian statistics agency does not publish core inflation data, but economists estimate the figure based on CPI data and some may publish their updated estimates after Friday’s release.Many economists say despite the economy growing by more than 8% last fiscal year, the recent decline in core inflation indicates overall weak domestic demand in an economy where private consumption accounts for nearly 60% of GDP.Some also said a telecommunications tariff hike effective from this month is likely to exert upward pressure on inflation over the coming months, arresting a further fall in core CPI.”Given the weight in the CPI basket (for telecoms) and past translation trends, this should push up headline CPI by another 20 bps or so, starting July,” said Sajjid Chinoy, chief India economist at J.P. Morgan.”To the extent that this is a one-off price hike, the RBI should look through this. But again, it adds to the uncertainty of the inflation outlook.”With inflation expected to stay above the Reserve Bank of India’s 4% medium-term target this fiscal year and next, the central bank is forecast to cut rates just once this year, next quarter.The U.S. Federal Reserve is forecast by economists to begin its easing cycle in September.Wholesale price index-based inflation likely surged to an annual 3.50% last month from 2.61% in May, the survey showed. More

Credibility concerns were raised earlier this year when Turkey’s Statistical Institute (TUIK) said it did not have historical data on product prices beyond May 2022 and stopped sharing it. Separate concerns were raised last week when it released data showing annual inflation fell more than expected to below 72% in June from 75% a month earlier.Addressing the historical data concerns, the institute’s head, Erhan Cetinkaya, said inflation was calculated on the basis of more than 600,000 prices and previously published product prices had “no indicative value”. “The product basket remains where it is, the tables that are not being published are product prices… In order to announce product prices, another day of work is needed,” Cetinkaya was quoted by broadcaster NTV and state-owned Anadolu Agency as saying.No country publishes this data as part of their inflation figures, he added.Hakan Kara, a former chief central bank economist who is now at Bilkent University, was among those criticising TUIK’s move to stop publishing the data, saying it was required to calculate the consumer price index in any case. “Is TUIK destroying product prices every month after calculating the consumer price index?” he said in June. Though TUIK has faced questions over inflation calculations since 2018, several economists have said – despite the lack of the historical data – that accuracy has improved since June 2023 when a new cabinet began an economic policy U-turn. Cetinkaya said Turkey’s data on official inflation and perceived inflation was “the closest to each other” compared to global peers and that perceived inflation was twice the official figure for Turks. TUIK uses global calculation methods, he said. The central bank has hiked its policy rate to 50% from 8.5% in June of 2023 to cool prices. The June inflation data signalled the start of what is expected to be a sustained slide. Addressing concerns over the June data, Cetinkaya said that certain price hikes would be reflected in July figures. More