Despite being the largest company in the world, Saudi Aramco is about to finalise bank loans totalling $10 billion due to the global collapse in oil prices.
The company's need for cash grabbed attention in April, and the move has thrown doubt on the financial stability of Saudi Arabia.
It is believed that the money is being borrowed to pay for the acquisition of a 70 per cent stake in Saudi Basic Industries Corp (SABIC). The deal is said to be worth almost $70 billion. Aramco was granted unconditional EU clearance for its purchase of the Riyadh based firm back in February.
A group of 10 banks has agreed to provide the financing, with HSBC and Japan's Sumitomo Mitsui Banking Corporation (SMBC) said to be providing the largest commitments of nearly $1.5 billion each. The loans have been agreed but are not yet finalised, said a number of sources.
This news is likely to prompt further speculation over Saudi Arabia's financial health following the global crash in oil prices due to the fall in demand during the coronavirus crisis and Riyadh's decision to increase output despite the slump.
Saudi Arabia's dwindling foreign reserves are said to be an indication of the Kingdom's poor management.
Prior to King Salman taking the throne on 23 January 2015, foreign reserves totalled $732bn. According to the Saudi Arabian Monetary Authority (SAMA), by December last year they had fallen to $499bn in just four years.
Critics also point to de facto ruler Crown Prince Mohammad Bin Salman's poor decision-making, including going to war in Yemen, supporting a military coup in Egypt, and ratcheting up tensions with Iran, which prompted an attack on Saudi Arabia's largest oil installation.
The Kingdom's international standing fell even further with the murder of Saudi journalist Jamal Khashoggi in the Saudi Consulate in Istanbul in October 2018.