Saudi Aramco bond sale attracting record demand: Bank source

Paris: A bond sale by energy giant Saudi Aramco that aims to help diversify the Saudi economy attracted record demand Tuesday of over $100 billion from investors.

That level was reached just before bidding closed, a banking source told AFP.

Saudi Arabia’s Energy Minister Khalid al-Falih said on Monday that the bond issue, to raise $10 billion towards Aramco’s purchase of a controlling stake in chemicals behemoth SABIC, was already over-subscribed by three times.

MS Education Academy

Falih is also chairman of state-owned Aramco, the world’s largest energy company.

The firm announced last month it was buying a 70-percent stake in SABIC from Saudi Arabia’s main sovereign wealth fund, the Public Investment Fund (PIF), for $69.1 billion.

Aramco made $111 billion in net profit last year, making it the most profitable company in the world. It said it will pay for most of the SABIC purchase in cash.

Observers see the acquisition as way to boost the coffers of the PIF, which is leading efforts to transform the petro-state to a tech-focused economy.

Ahead of the bond issue, Aramco revealed its accounts to international ratings agencies for the first time ever.

The firm aims to “establish a permanent presence in the world capital markets,” Falih said in a clear reference that it will continue to seek debt.

Prior to the comments by Falih on Monday the amount that Aramco hopes to raise with the bond placement had not been specified. The bond documentation had only used language used by traders that indicates an amount superior to $1 billion.

The banking source said the maturities dating from three to 30 years were being offered.

Meanwhile, Aramco has not scrapped plans to sell up to five percent of its shares, which would likely raise tens of billions of dollars.

Fitch ratings agency said last week that based on information received from Aramco, its planned initial public offering (IPO) still stands and is likely to take place in 2021.

The SABIC operation provides a way to pump cash into the PIF while work on the IPO continues.

[source_without_link]AFP[/source_without_link]

Subscribe us on The Siasat Daily - Google News
Back to top button