DUBAI: The Saudi state oil company’s debut on Wednesday on the international capital markets is set to break all records for a bond issue by an emerging market entity.
The Saudi Aramco bond issue attracted more than $100 billion in orders from global investors, the largest ever for emerging market bonds, company sources said on Tuesday.
That easily surpasses the $52 billion for Qatar’s $12 billion deal last year, $67 billion for Saudi Arabia’s own sovereign debt issue in 2016 and $69 billion orders for Argentina’s $16.5 billion trade the same year.
Aramco will raise $12 billion from the bond sale, split into maturities ranging from three to 30 years. Even before they go on sale, the new bonds were trading up in the “gray market.” “Strong demand in a world looking for extra yield, a new name, and lots of cash,” said Andrew Brenner, managing director of National Alliance Capital Markets.
The appetite for Aramco debt was stimulated by a series of “road shows” by the company’s executives and their advisers in the main global financial centers, and follows publication of the first-ever prospectus to give hard details of the company’s finances and ownership structure.
It will also quieten suggestions that the global financial community had cooled on Saudi Arabia as an investment destination since the murder last year of journalist Jamal Khashoggi.
Khalid Al-Falih, the Kingdom’s energy minister and chairman of Aramco, told a gathering in Riyadh this week that the historic bond would be the beginning of a “permanent presence in capital markets, in bonds, shares and
paper.”
Demand for the bond of more than $100 billion is equal to the amount Aramco expects to raise through international equity markets in an initial public offering on stock exchanges, which has been postponed until 2021.
