Saudi Aramco breaks record as demand for its bond tops USD 85 billion
Aramco was expected to raise around USD 10 billion from the deal.
Dubai: Orders for Saudi Aramco’s debut international bonds topped USD 85 billion, sources familiar with the matter said, a record breaking vote of market confidence for the oil giant.
Aramco was expected to raise around USD 10 billion from the deal, which will be priced later on Tuesday and is seen as a gauge of potential investor interest in the Saudi company’s eventual initial public offering.
Before the six-part bond deal was marketed on Monday, Saudi Energy Minister Khalid al-Falih said initial indications of interest for the paper were over USD 30 billion.
Demand for the paper was the largest for emerging markets bonds since an orderbook value of more than USD 52 billion for Qatar’s USD 12 billion bonds last year.
Aramco’s bonds have attracted demand from a wide range of investors, as state-owned Aramco’s vast profits would put its debt rating - if unconstrained by its sovereign links - in the same league as independent oil majors like Exxon Mobil and Shell.
The issue follows on the heels of Aramco’s planned USD 69.1 billion acquisition of a 70 per cent stake in petrochemicals firm Saudi Basic Industries Corp (SABIC) from the Saudi sovereign wealth fund, a deal that many see as a transfer of government funds aimed at boosting the Saudi Crown Prince’s economic agenda.
“This bond is being issued for two reasons: to establish Aramco’s status as an independent corporate identity and to enable the transfer of wealth out of the company,” said Marcus Chenevix, analyst, MENA and global political research at TS Lombard.
Aramco, however, said the bond issue was not linked to the SABIC acquisition and many see it as a relationship building exercise with international investors ahead of its planned initial public offering, scheduled for last year and then postponed to 2021.