The world’s largest oil producer Saudi Aramco’s first international bond issue has been oversubscribed by nearly 10 times. It had expected to raise around $10 billion with its bond issue and is yet to set the price of its bonds. As per earlier plan Aramco had planned to set up a six part deal of around $10 billion but it has received funds which are nearly $100 billion.
This first debt issue from Aramco has generated interest from global investors as it offers greater visibility of financial performance of most profitable company in the world. The oil conglomerate owned by government of Saudi Arabia is marketing its debt issue that has been split into six trances which have maturities between three to 30 years. According to Mohieddine Kronfol of Global Sukuk, all knew that the size of this debt was likely to be large but never estimated that it will be so overwhelming.
He said that investors were attracted by this low risk high quality offering which offers participants a chance to look closely at a country which till recent lacked investment portfolios. Before the books were opened of Aramco it had already attracted more than $30 billion as per statement of energy minister Khalid Al-Falih when he was addressing a Riyadh based energy forum. These new bonds are being marketed by Aramco as per price of government bonds of Saudi.
After it reported earnings of 2018 which were way above other oil majors Aramco received rating of A+ from Fitch followed by Moody’s awarding it A1 rating. The bond issue launched last week will help to bring funds for making deposit on Aramco purchase of majority stake of $69.1 billion in Sabic. Aramco is expected to make its stock market debut in 2021 and the IPO will help to collect funds for the government which is aiming to bring down budget deficit followed by plans of diversifying Saudi’s economy which is concentrated on oil.