Saudi Aramco's $10bn bond sale will close on Wednesday

Aramco’s bond debut attracts $30bn bids

The state-owned company generated the most profit of any corporation in the world in 2018 with income of $111.1 billion - more than Apple Inc., Google's parent Alphabet Inc. and Exxon Mobil Corp. combined.

"We assume the transaction will be funded largely from Saudi Aramco's free cash flows, and the company's leverage will remain very conservative by industry standards", the ratings agency said. The bonds, which range in maturity from three to 30 years, are expected to attract demand from both emerging markets and investment-grade buyers.

The company opened up a six-stage bond sale on Monday, with investors across Europe, Asia and North America pledging over $30 billion on the first day.

Demand for the paper was the largest for emerging markets bonds since an orderbook value of more than $52 billion for Qatar's $12 billion deal a year ago. An order book as large as $85 billion indicates that many investors that shunned "Davos in the Desert" are also planning to buy the bonds.

Saudi Aramco has received more than $50bn in bids for its debut global bond sale, which had been expected to be in the $10bn region, sources familiar with the matter said.

The IPO was announced with a great deal of fanfare by the Saudi Crown Prince, Mohammed Bin Salman (MBS), and the success of the bond sale may mean that he can forego the IPO plan without losing face.

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It would also encourage Aramco to go back to the bond markets at a later date.

JPMorgan and Morgan Stanley are managing the bond sale along with Citigroup Inc., Goldman Sachs Group Inc., HSBC Holdings, and NCB Capital. But accounts published before the firm's debut in the worldwide bond market also show Aramco - an organization that produces about 10 percent of the world's crude - doesn't generate as much cash per barrel as other leading oil companies like Shell because of a heavy tax burden.

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

Aramco is raising money as bond investors search for higher yields.

The bond will create a USA dollar curve for the company, and also finance the US$69bn acquisition of 70% of Saudi Basic Industries Corp (SABIC), a petrochemical company from the kingdom's wealth fund.

According to the Guardian, the $100 billion demand is an emerging market record, with the highest so far being $69 billion for Argentina's 2016 bond sale. The deal between three government-owned entities - where the kingdom's sovereign wealth fund sells its 70 percent stake in Sabic to Aramco - moves money from one pocket of the state to another.

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