Saudi Aramco Bond Offering Attracts $100 Billion

Saudi Aramco has received bids for more than 10 times the $10 billion it was expected to raise in a debut international bond issue, CNBC reported.

Initially, the six-part deal had been expected to be at least $10 billion in size, but a source familiar with the situation said that orders have topped $100 billion.

According to CNBC, The first-ever debt issuance from Aramco has sparked massive global interest, with the move offering investors greater visibility into the financial performance of the world’s most profitable company. The offering comes ahead of plans to list a portion of Aramco on international stock markets in about two years.

Saudi Arabia’s state-controlled energy giant is marketing a landmark U.S. dollar denominated debt issue split into six tranches, with maturities ranging from three to 30 years.

“Everyone knew the size was going to be big but what is worth highlighting is that the quality is impressive — much better than the market had been expecting,” Mohieddine Kronfol, chief investment officer of Global Sukuk and MENA Fixed Income at Franklin Templeton Investments, told CNBC via telephone.

It is a “high quality and low-risk offering” which offers market participants a chance to take a serious look at a country which has historically been underweight on investment portfolios, Kronfol said.

Before opening the books on Monday, Aramco’s debut international bond sale had already attracted over $30 billion in demand, Saudi Energy Minister Khalid al-Falih said Monday, while speaking at the inaugural Gulf Intelligence Saudi Arabia Energy Forum in Riyadh.

Market participants were thought to be so keen to buy the bonds, they were willing to risk ending up getting a lower return than on Saudi sovereign debt, Reuters reported, citing people familiar with the matter.

Earlier this month, Aramco received an “A+” rating from Fitch and an “A1″ rating from Moody’s in its first ever credit ratings, following 2018 earnings that dwarfed those of international oil majors.


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