Saudi Aramco international bond attracts US$100bn

Khursaniyah Gas PlantSaudi Aramco debut international bond offering had attracted more than US$100bn, sources familiar with the matter said

The bond issue was expected to raise at least US$10bn for Saudi Aramco, which is said to be the most profitable company in the world.

This bond is part of the Crown Prince Mohammed bin Salman’s ambitious plan to diversify his nation’s oil-dependent economy.

By offering investors the opportunity to own a piece of the world’s largest oil company, the kingdom hoped to raise US$100bn to seed investments in new industries and turn the country into a technology and entertainment hub.

Officers from Saudi Arabia have added that selling just five per cent of the company in an IPO could generate US$100bn to fund Vision 2030.

The company released a prospectus earlier this month that showed it made a profit of US$111bn last year.

The company stated that it will use the bond sale proceeds for general purposes. Investors expect some of the money raised to fund its purchase of 70 per cent of Saudi Basic Industries Corporation (Sabic), the state-owned petrochemical company.

However, Saudi Aramco noted that the bond issue was not linked to the SABIC acquisition, which will be paid in tranches through internal cash flow and possibly other resources.

The oil company has hired Lazard as a financial adviser for the bond deal. JPMorgan, Morgan Stanley, HSBC, Citi, Goldman Sachs and National Commercial Bank have been chosen to arrange the bond issue.

As the country diversifies its economy from oil, it has been on an aggressive drive to attract international investment.

“This bond is being issued for two reasons: to establish Aramco’s status as an independent corporate identity and to enable the transfer of wealth out of the company,” commented Marcus Chenevix, analyst, MENA and global political research at TS Lombard.

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