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Saudi Aramco demands $100 billion for debut global bond

Business Insider logo Business Insider 4/9/2019 Callum Burroughs
a man standing in front of a building© Reuters

Saudi Aramco's debut bond sale could be one of the largest ever in emerging markets after drawing in $100 billion in orders.

It's part of a transparency push on behalf of Saudi Arabia as part of a will-they-won't-they over the company's plans for an initial public offering, which it shelved last year.

The bond issuance reflects the company's reluctance to go public after being shunned by investors at a Saudi event dubbed "Davos in the desert" last year, following the murder of journalist Jamal Khashoggi.

The deal, run by major Wall Street firms including JPMorgan, Morgan Stanley, Citigroup, and Goldman Sachs alongside HSBC and NCB, also shows that financial institutions haven't cooled on the kingdom.

Investors are keen for yield in the current trading environment, making the $10 to $15 billion issue a magnet for big financial institutions.

It's further evidence of the appeal of Saudi Arabia's vast oil reserves to investors after the country brought in $7.5 billion in sovereign bonds earlier this year despite overwhelmingly negative reactions to the government after Khashoggi's death.

Saudi Aramco reported $111.1 billion in net income last year,according to Moody's, making it more profitable than Apple, Amazon, and Alphabet combined. The company filed for its international bond debut on Monday, a $10 billion issuance following a doubling of its profits after oil prices rose last year.

It's the first major opportunity for investors to scrutinize the offering of one of the world's largest energy companies given the usually secretive nature of Aramco's disclosures. Saudi Aramco accounted for approximately one in eight barrels of crude oil produced globally from 2016 to 2018, according to the prospectus.

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