Orders for Saudi Aramco’s debut international bonds topped $100 billion, a strong vote of market confidence for the world’s largest oil company, Kallanish Energy reports.
State-owned Aramco raised roughly $12 billion from the deal, which was to be priced late Tuesday and is seen as a gauge of potential investor interest in the Saudi company’s eventual initial public offering.
Demand for the debt was the largest for emerging market bonds since an order book value of more than $52 billion for Qatar’s $12 billion bonds last year, and surpasses $67 billion in demand for Saudi Arabia’s inaugural bonds in 2016, Reuters reported.
The Aramco bond has attracted interest from a wide range of investors, as the oil producer’s profits would put its debt rating — if not linked to the kingdom — in the same league as independent oil supermajors like ExxonMobil and Shell.
Aramco last week opened for the first time its books to investors, showing it is by far the most profitable company in the world. Earnings in 2018 totaled $224 billion, and free cash flow reached $86 billion.
The issue follows on the announcement of Aramco’s planned $69.1 billion acquisition of a 70% 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 Saudi Crown Prince Mohhamed bin Salman’s economic agenda.
Aramco, however, said the bond issue was not linked to the SABIC acquisition, which will be paid in tranches through internal cash flow and, potentially, other resources.
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