By Rania El Gamal, Davide Barbuscia and Alex Lawler
DUBAI/LONDON (Reuters) - Saudi Aramco's board is set to meet this week in Saudi Arabia where it will approve a bond issuance plan that will likely help finance a potential acquisition of a strategic stake in Saudi petrochemicals maker SABIC, industry sources said.
Aramco, the world's top oil producer, plans to issue its first international bonds in the second quarter of 2019 and the planned issuance will probably be around $10 billion, Saudi Energy Minister Khalid al-Falih has said.
The company's representatives are expected to meet fixed-income investors in a bond "roadshow" in April, two sources familiar with the matter said.
The deal is expected to involve the purchase of all or nearly all of the 70 percent stake in SABIC held by the Public Investment Fund, the kingdom’s top sovereign wealth fund. That implies a deal value of roughly $70 billion, though the acquisition price has not been made public yet.
The Aramco board of director, which plans to meet on Monday, according to two sources, will also approve the 2018 financial results for the company, which is likely be included in the bond prospectus along with the firm's oil and gas reserves.
"The board will approve the bonds. SABIC (deal) is progressing but any project of this size takes a long time," said one of the sources.
Aramco did not immediately respond to a request for comment.
Senior Aramco officials have traveled to the United States and Britain in recent weeks to gauge investor appetite for the planned bond, the sources said.
Aramco had already picked a group of banks including Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS), Citi, HSBC and Saudi Arabia's National Commercial Bank to help arrange the planned bonds.
When Aramco approached banks formally for the bonds sale earlier this year, it asked them to submit proposals for the bonds and potential commitments for bank debt financing, banking sources said.
The sources said the acquisition payment is likely to be staggered, allowing Aramco to tap debt investors in various phases - a move which would avoid straining banks that are not ready to commit large sums through a single loan facility.
Banks have pitched hard over the past months for this high-profile bond mandate, hoping to be rewarded by Aramco with future mandates for capital markets transactions and other banking business.
JPMorgan and Morgan Stanley, along with other banks, were working on the planned stock market listing of Aramco before the move was put on hold due to the SABIC acquisition. The new planned listing date is 2021, Saudi officials said.