Bond issue is huge market vote of confidence in Aramco despite some investor concerns about government influence
Davide Barbuscia, Rania El Gamal and Hadeel Al Sayegh
State-owned Aramco is expected to raise more than $10bn from the deal, which will be priced later on Tuesday and is seen as a gauge of potential investor interest in the Saudi company's eventual initial public offering. "Purely on figures, it is a fantastic credit," said Damien Buchet, CIO of the EM Total Return Strategy, Finisterre Capital.
But for some investors Riyadh's control over the oil giant is an issue as its state ownership means decisions will ultimately be for the benefit of the government rather than investors. Initial indications of more than $30bn in investor demand —before the bonds were actually sold — prompted Aramco to market the notes with almost no premium to Saudi government debt.
Aramco, however, said the bond issue was not linked to the Sabic acquisition, which will be paid in tranches through internal cash flow and, potentially, other resources.
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