Massive Win For Saudi Aramco In The Debut Bond Sale

Market Expertz   |     April 11, 2019


Saudi Aramco, the state-owned oil company and now one of the largest companies in the world, has received $100 billion in orders in its debut bond sale. The company is the part of a transparency push under the government due to the uncertainty around the company’s initial public offering, which it has been considering since last year. The bond is indicative of the company’s resistance to going public after last year’s “Davos in the desert” controversy. The deal is being backed by some of the Wall Street institutions such as JPMorgan, Morgan Stanley, Citigroup, and Goldman Sachs along with HSBC and NCB. Investors are expecting to get positive results from the contemporary trading environment, which has made the $10 to $15 billion issue appealing to other financial firms.

The bond also adds further evidentiary value to the massive oil reserves owned by Saudi Arabia in the eyes of investors, especially after the nation brought $7.5 billion in sovereign bonds at the beginning of this year even though the government had to face opposition after journalist Jamal Kashoggi’s death. The company has reported more than $111 billion net income in 2018 that exceeded the revenue of Apple, Amazon, and Alphabet combined. It filed for its international bond debut with a $10 billion issuance after the profits of the company doubled after oil prices hiked last year.

It poses an excellent opportunity for investors to analyze the offering of one of the world’s largest energy companies that otherwise keeps its disclosure under the wraps. Aramco was responsible for the production of nearly one in eight barrels of crude oil produced across the globe during the period from 2016 to 2018. The value of the debut bond is possibly one of the largest deals ever in emerging markets and Aramco hopes to bring in a substantial amount.

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