JPMorgan & Chase Co. is set to earn more than $100 million on a recent trade tied to the sale of a stake in Saudi Aramco’s oil pipelines, unexpected gains even in the sprawling interest-rate swap market, Bloomberg reported citing people familiar with the matter.
The bank is poised to book gains on a hedging transaction with US investment firm EIG Global Energy Partners, which agreed last month to invest $12.4 billion in the pipelines, the people said.
JPMorgan advised Aramco on the deal and was one of two banks that helped it arrange a loan of more than $10 billion offered to the buyers, the people said.
Given the size of the financing, EIG separately entered into a so-called swap deal with JPMorgan to guard against fluctuations in interest rates.
JPMorgan is on course to reap $100 milion profit after markets moved in its favor, according to the people, who asked not be identified discussing sensitive information.
JPMorgan’s pay day highlights why global banks continue to chase big deals from Aramco, with the expectation of profiting from such ancillary work even if the Saudi energy company itself doesn’t dole out large advisory fees.
EIG is leading a consortium that’s buying a 49 percent interest in leasing rights over Aramco’s oil pipelines, according to an April statement.